The Provimi Group (listed on Euronext Paris), one of the
world leaders in the animal nutrition business, this
week announced its results for 2007.
- Increased raw material prices reduced operating
margins, particularly in Pet food,
- Good performance in
Animal nutrition in The Netherlands, Spain, Poland, Romania,
Brazil, Jordan, Vietnam, South Africa,
- Increases in central
cost, restructuring charges and higher financial expenses
negatively impacted results.
Sales increased by 16.6% to EUR 1,918.5 million which
was largely due to higher sales prices resulting from increased
raw material costs. On a like-for-like basis, sales growth
was 14.5%. Less favourable exchange rates had a negative
effect of EUR 13.3 million.
Profit from operations before other
by 15.3% to EUR 91.1 million. Exchange rates had a negative
effect of EUR 1.5 million. On a like-for-like basis, profit
from operations decreased by 10.1 % over the period.
In France, sales benefited from higher exports and the contribution from
the Pet food business acquired in December 2006. Animal
nutrition results improved, but the overall profit comparison
was affected by a one-off inter-company profit in 2006.
In Poland, strong growth in Complete feed, as a
result of lack of grain at customers, more than compensated
for lower Premix sales, which resulted in a strong increase
in sales and results. In the Rest of Europe, the
most significant contribution to growth in sales and profit
came from the animal nutrition business in the Netherlands,
Spain, Portugal, Russia, Romania and Bulgaria. This was
largely offset by lower results in Pet food, where market
conditions were difficult, notably in Western Europe, as
strong increases in raw material prices could only be partly
passed on to customers. In North America, sales
and results increased in local currency as a result of
new market initiatives and the acquisitions made in 2006,
but profit in Euro reduced due to the weaker dollar. In
the Rest of the world, most countries reported a
strong increase in sales and results. Difficult market
conditions due to swine disease in China, were more than
offset by strong growth in India, Jordan, South Africa
and in Brazil, which saw a strong sales increase in feed
Holding and Consolidation results decreased by EUR 19.3 million compared
to 2006,which at the time
benefited from several positive non-recurring central items.
In addition, 2007 Head Office costs have increased over
the previous year as a result of various key strategic
initiatives being implemented across the Group.
Other income and expenses amount to EUR 21.7 million (2006: EUR 8.3 million).
These relate to the integration of the Group’s Pet
food activities in Europe (EUR 11.3 million), the reorganization
of the Complete feed activities mainly in Central and Eastern
Europe (EUR 3.8 million) and the costs incurred related
to the change in shareholding of the Provimi Group (EUR
5.0 million) and a subsequently organized and launched
strategic review of Provimi's operations (EUR 1.6 million).
Net financial costs increased to EUR 43.4 million (2006: EUR 19.7 million),
mainly as a result of the increase in net debt due to the
payment of special dividends, the acquisition of minority
shares in Poland and India, higher interest rates and the
write-off of capitalized costs of the previous financing
Pre-tax income amounted to EUR 26.0 million (2006: EUR 79.8 million).
The effective tax rate of the Group increased to 57% (2006: 28%). The
increase was due to tax paid on an exceptional dividend
received in the year and the non-recognition of deferred
tax assets for certain 2007 losses, which together had
an impact of EUR 7.5 million.
As a result of the above, net income – Group share decreased to
EUR 10.5 million (2006: EUR 54.8 million).
Net debt increased to EUR 793.6 million, including the debt of the disposed
Fish feed activities (2006: EUR 406.9 million). The increase
was mainly due to the distribution of exceptional dividends
(EUR 289.9 million), acquisition of minority shares in
Poland and India (EUR 61 million) and a higher working
capital (EUR 25 million).
The disposal of the Fish Feed activities in Spain, Denmark and Chile to Biomar
(Denmark) was completed on 31 January 2008. Sales and profit
from operations of the discontinued activities amounted
to EUR 155.8 million and EUR 7.2 million respectively (2006:
EUR 177.6 million and EUR 4.9 million).
Ongoing raw material price increases could continue to impact market conditions
in 2008. The Group will continue its restructuring activities
to improve efficiency and to adapt the organisation to
the changing market conditions.
The Provimi Group is active worldwide in all types of animal nutrition and
is a leader in all markets where it is present. It employs
over 8,000 people and has annual sales of EUR 1.9 billion.
Provimi has more than 100 production centres in some
30 countries and exports to over 100. Provimi manufactures
products and supplies technical support for various species,
including ruminants, poultry, swine and pets.
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