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Company update: Provimi (half year results 2009)

The Provimi Group, one of the global operating companies in animal nutrition, reports a profit decrease of 12.3% from operations before other operating income and expenses to €49.1 million.

Operations in Poland/Ukraine are still suffering from economic crisis, but Provimi reports excellent performance of Latin America. Performance of pet food activities is improving.


Revenues decrease of 23.3% was largely due to lower sales prices resulting from decreased raw material costs. 
 
(Unaudited, in million €)
30.06.2009
30.06.2008
Change
Revenues
840.6
1,095.6
-23.3 %
Profit from operations before other operating income/(expense)
49.1
56.0
-12.3-%
Profit from operations
-19.1
53.0
-
Net income - Group share
-53.9
50.0
-
Earnings per share
-2.07
1.92
-
 
The net impact of acquisitions and divestments was €29.8 million negative, while unfavourable exchange rates had a negative effect of €69.9 million. On a like-for-like basis, sales decrease was minus 17.3%. 

 
Revenues
Net Operating Income
(Unaudited, in € million)
H1 2009
H1
2008
Change
H1 2009
H1 2008
Change
France / Switzerland
102.2
110.3
-7.3%
8.2
8.5
-3.5%
North West Europe
77.4
93.0
-16.8%
6.2
6.8
-8.8%
Poland / Ukraine
136.2
256.5
-46.9%
0.9
11.3
-92.0%
Other Central and Eastern Europe
104.4
153.9
-32.2%
9.7
10.0
-3.0%
North America
114.2
115.9
-1.5%
11.3
9.7
16.5%
Latin America
86.4
82.7
4.5%
10.9
8.3
31.3%
Other
110.9
179.2
-38.1%
13.6
17.5
-22.2%
Holding
 
 
 
-12.8
-14.6
-12.3%
Pet Food
108.9
104.1
4.6%
3.7
3.1
19.4%
TOTAL
840.6
1,095.6
-23.3%
51.7
60.6
-14.7%
Animal Nutrition France / Switzerland
Provimi France has been preparing for the transfer of production from Trappes to Crevin as per August.
 
Sales were negatively affected by a decline of raw material prices and substantially lower milk prices for dairy farmers who were operating below break-even and thus purchased less nutritional products.
 
Animal Nutrition North West Europe
Considerably lower grain, soy and micro-ingredient prices reduced sales value per tonne of product sold.
 
In addition, Provimi experienced lower sales volumes, due to lower profitability for producers of meat, milk and eggs and the Group’s more stringent credit policy.
 
Sales and profitability of exports to Central and Eastern Europe were negatively impacted by declining local currencies.
 
Animal Nutrition Poland / Ukraine
The Polish market continued to be very competitive situation as in the second half of 2008. Nevertheless, after a slow start, volumes and margins improved in the period from March to June.
 
The first results of the reorganisation programme, which started in the fourth quarter of 2008, started to come through.
 
The Ukraine market was strongly affected by the economic crisis in the country, but Provimi has been able to continue its operations satisfactorily.
 
Animal Nutrition Other Central and Eastern Europe
The animal feed market in these areas showed some improvements in the second quarter of 2009.
 
In April and May, African swine fever severely impacted pork consumption in Central and Southern Russia.
 
Margin performance was good in all countries, despite lower volumes. Local currencies dropped significantly against the euro at the beginning of the year, but started to stabilise in the second quarter.
 
Animal Nutrition North America
The global recession has caused a decline of the number of animals in each specie group in the US.
 
Decreasing consumer demand and exports resulted in market prices below production costs.
 
With fewer animals and producers reducing feed inputs wherever possible to conserve cash, volumes at Provimi’s businesses were below prior year levels.
 
The manufacturing plant in Marion, Iowa, was closed in May and manufacturing has been consolidated into the recently expanded factory in Fremont, Nebraska.
 
Animal Nutrition Latin America
In Brazil, Provimi’s poultry, swine and ingredient activities improved compared to same period last year.
 
The business showed increased profitability, generated by higher margins and cost reduction.
 
The integration plan of Biovet into the other Latin American activities has made good progress during the first six months of 2009.
 
Animal Nutrition Rest of the world
Strong operational performance in notably Vietnam, China and South Africa was to some extent offset by certain currencies declining in value against the euro.
 
Volumes were slightly down in most markets; however profitability remained solid on the back of improving margins.
 
Provimi’s business in Jordan came under pressure as a result of broiler meat imports to the country, reducing the size of the local broiler industry.
 
Pet food
Performance continued to improve, with sales growth accelerating in existing countries and the opening of new markets and new accounts in notably Germany, Poland, and Romania.
 
Service levels to customers and operational efficiency improved, opening new growth opportunities for the Group's pet food activities.
 

Dick Ziggers

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