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News 254 views last update:6 Aug 2012

Raw material prices hurt Evialis results

Financial results of French feed firm Evialis in the first half year was much affected by raw material prices.

Turnover of Evialis amounted to €342.2 million, an increase of 8.3% compared to the first six months of 2006.

This increase is largely the effect of significant price rises of raw materials, especially cereals (over the past year increases have been: corn + 43%, wheat + 46%, soy + 20%). Also the good results from the "Nutrition International" division (+11%) attributed to the good results.

Exchange losses, mainly relating to South Africa and Vietnam negatively impacted on turnover by €3.5 million.

Reduction in profit
Gross profit margin increased 1.8% to €100.2 million (on a like-for-like basis). This small increase is explained by the difficulties Evialis encountered to transfer higher raw material prices into retail prices, for a greater extent in the "Nutrition France" division and in mature markets.

On the cost side extraordinary expense are the result of the reorganization of the French premix activities following the purchase of Nutreco's premix business in France.

The R&D budget has been extended from €1.5 million to €2.2 million in a difficult market. These developments mainly concern building project of the largest privately owned aquaculture research centre in the country.

Outlook
As far as raw materials are concerned there seems to be no signs on the horizon that prices will be relaxed in the short or medium term, confirming that this phenomenon is structural, lasting and worldwide, Evialis said in a press release.

Moreover, the maturity of the French market reinforces the necessity for the company to rebalance its activities towards international markets as soon as possible.

Evialis wants to meet these challenges with:

  • Innovation, enabling the provision of optimal nutritional and economic solutions to the livestock farmers,
  • Internationalization through organic or external growth, to locate the growth areas where markets are rapidly developing, and
  • Optimization of the French operations to capitalize on a demanding and perfectionist markets.

Meeting the year's forecasts is not out of reach, but remains a highly ambitious challenge, the company concludes.

Editor AllAboutFeed

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