Process Management

News 218 views last update:7 Aug 2012

Provimi, Q3 results up

Sales of feed maker Provimi increased by 13.5% to € 1,502.2 million. Volumes and sales showed an increase in almost all regions, with particularly strong growth in North America, France and Poland.

New acquisitions contributed € 50.3 million to sales, while exchange rates had a negative effect of € 16.2 million.

On a like-for-like basis, sales growth was 11.1% over the period. The sales increase was largely due to the impact of higher raw material prices with a slightly negative impact on the Group's operating margin.

Higher market share in France
In France, Provimi increased sales in a shrinking market, thus gaining market share. Exports continued to develop favourably in spite of the weakening dollar.

The pet food business acquired in December 2006 contributed to nearly half of the sales growth.

In Poland, sales increased compared to the same period last year as farmers purchased more complete feed than premixes due to the low availability of grains.

In the rest of Europe, sales showed a further healthy growth, notably in Bulgaria, Romania, Russia and the Netherlands. Strong sales growth was also noted in pet food.

North America going strong
In North America, sales were strong throughout the year. The acquisition of Vita in Canada in June 2006 and the acquisitions of Nutrius and Virtus Nutrition in California later in that year stimulated sales growth further.

In the rest of the world, most countries reported a strong improvement in volumes and sales. This was particularly the case in Brazil, India and Vietnam. In China sales growth was held back due to swine disease.

As a result of the joint venture with AquaChile in June 2006, which led to a partial deconsolidation of fish feed, sales in Chile were considerably lower than in 2006.

Raw materials
The prices of major ingredients notably soy and grains continue to show an upward trend. However, the prices of dairy ingredients and fish meal are decreasing.

Overall operating margins for the Group continued to be negatively affected during the third quarter, as a result of the delay in passing on increasing raw material costs to customers particularly in pet food were contracts tend to be longer.

Fish feed sale
On 6 November 2007 Provimi reached an agreement to sell the majority of its fish feed activities to the Biomar Group (Denmark). Sales in the first nine months for the divested activities amounted to € 115.5 million (2006: 129.3 million). This transaction will allow the group to better focus on its core business.

Outlook
Ongoing raw material price increases, especially grains, have continued to impact market conditions in the second half of the year. This will impact negatively the full year operating performance.

Furthermore, the Group will incur restructuring costs in the second half year related to its pet food activities in southern Europe.

Related links:

Provimi

Biomar

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