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News 285 views last update:6 Aug 2012

Feedstuff pricing pressures Provimi margins

The Provimi Group has published its consolidated results for the first six months of the year. Despite the boost in turnover through higher prices for raw materials profit margins are under pressure.

Sales increased by 13.9% to € 976.5 million with most countries showing sales growth through increased volumes.

The net impact of acquisitions and divestments contributed € 39.8 million to sales, while exchange rates, mainly the US dollar and the Chilean peso, had a negative effect of € 13.0 million. On a like-for-like basis, sales growth was 10.8%.

Profit from operations before other income/expenses slightly decreased by 0.8% to € 50.0 million. The net impact of acquisitions and divestments contributed to € 0.2 million, while exchange rates had a negative effect of € 0.8 million. On a like-forlike basis, profit from operations increased by 0.4% over the period.

Results per region:
France
Despite the fact that gross margin was under pressure because of increased raw material costs, results increased by 12.7% thanks to higher exports and a stronger domestic market.

Poland
Results recovered well from the difficult market conditions in the second half of 2006. However, an unfavourable product mix negatively impacted results compared to the same period last year.

Rest of Europe
Overall results were below the same period last year, with a good performance in animal nutrition, especially in the Netherlands, Spain, Russia and Bulgaria and Pet food in Central and Eastern Europe.

However, a slow down in Pet food activities in Western Europe and a delay in passing on raw material price increases to supermarket chains held back results.

North America
Profit increased by 11.4%, thanks to the continued strong performance and the contribution from new product introductions.

Rest of the world
Most countries' results were well above those in the same period last year, notably in Brazil, India, Vietnam and South Africa. China's activities were affected by difficult market conditions in the swine market. Fish feed activities in Chile continued their strong performance.

Lower profit
Profit from operations after other income and expenses decreased by 15.1% due to nonrecurring items (€ 7.9 million) mainly related to restructuring costs for the Group's complete feed activities, costs related to the change in shareholding of the Provimi Group and a subsequently organized and launched strategic review of Provimi's operations.

Consequently, net income – Group share decreased by 26.6%, also impacted by higher net financial costs as a result of the write-off of capitalised cost (€ 4.2 million) of the previous financing facility, higher indebtedness due to acquisitions and by a higher tax rate due to higher results in high income tax countries.

Net debt increased to € 461.3 million (31 December 2006: €: 406.9 million), after deducting € 29.2 million for deferred financing charges related to the new financing facility. The increase was due to acquisitions of minority shares in Poland, the higher working capital due to increased raw material costs and selling prices and exchange rate effects.

Outlook 2007
Ongoing raw material price increases could continue to impact market conditions in the second half of the year. The Group will continue its restructuring activities to improve efficiency and to adapt the organisation to the changing market conditions.

Editor AllAboutFeed

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