Nutreco trading update Q3 2009

29-10-2009 | |
Nutreco trading update Q3 2009

Dutch animal nutrition group Nutreco said today it expects operating profit to rise 10% in the second half of the year as it reported nine-month sales slightly below estimates.

Nutreco, which produces animal and fish feed and is a major poultry producer, said third-quarter sales fell 8.9% to € 1.206 billion, bringing the nine-month total to € 3.334 billion.
Conclusions for Q3 in brief:
  • Volumes increasing in Fish feed and Premix and feed specialties in Q3;
  • Operational results Q3 Animal nutrition and Fish feed in line with outlook;
  • Meat Spain reported excellent results in 3rd quarter;
  • Revenue Q3 2009 € 1,206.3 million; a decrease of 8.9% from Q3 2008 mainly due to lower raw material prices;
  • Working capital balance will be reduced by approximately € 50-75 million at year-end compared with 2008;
  • Decision competition authorities for acquisition of animal nutrition business from Cargill in Spain and Portugal expected in 4th quarter.
Wout Dekker, Nutreco CEO said, “We are pleased with the performance in the third quarter of this year. After a challenging start of the year we see that the results are now in a stronger mode and we have confidence this will continue in the remainder of the year. The overall demand for feed is increasing compared with the first half year which is encouraging. The performance is further based on costs savings.”
Premix and feed specialties
Premix and feed specialties reported a 6.5% decrease in revenue compared with Q3 2008. The prices were on average 4.6% lower and the foreign exchange effect was -5.4%.
This was partly offset by a positive volume development of 1.2% and the contribution of acquisitions of 2.3% .
The operational results of Premix and feed specialties are in line with the outlook. The year-to-date revenues show a volume decrease of 6.9% versus last year, which was 10.5% in the first half of 2009.
Compound feed Europe
The revenue of Compound feed Europe was € 77.6 million lower than in Q3 2008 (-25.4%).
Lower sales prices accounted for approximately 20.5% due to lower grain and soy prices compared with Q3 2008. Volumes decreased by 4.9% due to a lower demand for feed for dairy cows and pig feed mainly related to the low milk and pig prices. In the year we see a recovery in volumes in comparison with 2008 to -7.3% in Q3 year-to-date from -8.3% in the first half year. The operational results in Q3 are profitable and on track to compensate for the first-half year loss.
Animal Nutrition Canada
The revenue in Q3 2009 of Animal Nutrition Canada was € 95.4 million compared with € 101.2 million in Q3 2008 (-5.7%). The decline was mainly because of lower prices (-5.9%). The volumes were slightly higher than in Q3 2008. The operational results are in line with last year. Nutreco sees some recovery of the volume development, year-to-date the volume is -3.3% versus last year. In June the volume was -5.2% versus last year.
Fish feed
The revenue in Fish feed of € 372.9 million equals the revenue in Q3 2008. The volume increase in the quarter was 3.5% and the price effect was 0.4%, this increase was offset by a -3.9% foreign exchange effect. A strong volume growth in Norway is compensating for the decline in volumes in Chile, where there is a reduced demand for fish feed as a consequence of the ISA virus. The year-to-date volume development in Q3 versus last year was -4.2% versus -9.3% for the first six months in 2009.
Meat and other
The revenue from ‘Meat and other’ was 6.1% lower, mainly related to 6.6% lower prices. The volumes were slightly above the ones of last year. Due to lower feed cost prices and good poultry prices the results in Q3 continued to be strong.
Outlook second half year 2009:
The following developments are expected for the second half year of 2009:
Premix and feed specialties: operational result in line with the 2nd half 2008 (excluding € 5 million benefit in 2008 related to favourable raw material positions);
Compound feed Europe: return to profitability which will lead to a marginal profit over the full year 2009. Decision about acquisition of animal nutrition business from Cargill expected in 4th quarter;
Animal Nutrition Canada: slight improvement of the operational result compared with the 2nd half of 2008;
Fish feed: strong growth in Norway in 3rd quarter confirms outlook for the year; EBITA slightly below last year. A higher biomass in Norway will largely compensate for the lower volumes in Chile as a result of the ISA virus;
Meat and other: strong results in the 2nd half of 2009 due to good poultry prices and lower cost prices because of lower feed prices.
Operating result second half year 2009:
In comparison with the 2nd half year of 2008, Nutreco expects a 10% higher EBITA before exceptional items in the 2nd half year of 2009. As a result of lower raw material prices and due to the company-wide programme to reduce the working capital balance Nutreco expects to reduce last year’s the working capital balance of € 254 million by € 50-75 million at year-end.

Dick Ziggers Former editor All About Feed