Provimi: pet food and animal nutrition trading update

Overall operational performance improved strongly in H1 2010 compared to the same period last year. Revenues have increased by 6.2% to € 892.9 million, following the raw material prices trend. The impact of acquisitions and divestments reduced revenue by € 2.4 million. Favourable exchange rates had a positive effect on revenue of € 46.7 million. Recurring operating profit increased by 31.9% to € 68.2 million, against € 51.7 million over the same period in 2009, helped by the initiatives implemented by the Group last year. The impact of acquisitions and divestments reduced the Group’s recurring operating profit by € 0.7 million, while favourable exchange rates had a positive impact of € 3.3 million.

Russia outperforms
For its Animal Nutrition business, Provimi continues to focus and invest in emerging markets where the greatest growth in demand for its nutritional solutions is expected. In particular, the Group is investing and developing its businesses in Russia, Asia and Latin America. The Russian business continues to outperform the market by providing consistent performance driven solutions to its customers.

Opportunities to expand
In Asia, Provimi has strong footprints in key animal nutrition markets such as India, China and Vietnam and is looking for opportunities to further expand there. In India, the business is quite diverse with a strong infrastructure and well positioned to benefit from the expected growth in the market as meat consumption increases. Especially the animal nutrition side of the business is repositioned and invested in to ensure it is best placed to take a leading position in a market that is currently highly fragmented. Vietnam continues to show strong growth. 

Eastern Europe remain challenging
Provimi’s Latin American business, located in Brazil, Argentina and Colombia, is well positioned to serve this diverse region. Brazil in particular goes from strength to strength, clearly now positioned as the number one animal nutrition player in the third largest market in the world. In the more mature and consolidated markets of North America and Europe, Provimi’s animal nutrition business performed in line with markets. In particular, Provimi North America, an important business in the largest market in the world, has improved its manufacturing and operational efficiencies through consolidation of its operations. Poland and South East Europe are key regions that remain challenging. Clear initiatives are being implemented to better position the businesses in these important markets and to strengthen our performance there.

Diversification of pet food products
For its pet food business, Provimi experienced a strong performance in its core markets, continued expansion into new markets, a successful diversification of our product offering into higher margin segments and the strengthening of its relationships with leading retailers across Europe. Pet Food continued to grow volume and sales in all its markets in the first half of the year as it capitalized on its leading position as preferred private label partner for large retail food chains across Europe.

Relationship with German discounters
In the period sales were up 7% versus the previous year while performance has grown by improved efficiency and productivity. Sales growth was driven by strong trading performance in core and expansion markets including Poland (20% year on year) and Romania (26% year on year). The company also continued to increase its presence in Germany by strengthening its relationship with leading German discounters through sizeable new contract wins. The profitability of the business improved as it continued to successfully diversify its product offering into higher value added product segments.

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