Ebro posted a net profit on continuing operations of €92.9 million during the first nine months of 2011, a year-on-year growth of 16%. The net profit recorded in the third quarter of 2010 is not comparable with that of the first nine months of 2011, since the former included the proceeds from sale of the dairy business.
Net turnover totalled €1,305 million, 5% more than in the same period of last year.
The EBITDA or gross operating profit was €185.7 million, 4.5% down on 2010 due to the four essential factors mentioned in the company’s presentation of 1H results:
- The hike in durum wheat prices, which practically doubled those paid in the same period of the preceding year (rising from 180 €/t to 340 €/t).
- The negative exchange rate effect, which dented our profits by €7 million.
- The restructuring process undertaken in the German company Birkel, entailing an investment of €8.5 million.
The delay in starting up some of the production lines at the Memphis rice plant, which means that the envisaged savings will not be obtained until later.
In this regard, the quarter-on-quarter growth in EBITDA during 3Q 2011 was 27.4%, compared to 1.7% in the same period of 2010, proving that the situation experienced in the second quarter was circumstantial.
All in all, Ebro’s consolidated earnings reflect the sound, healthy situation of the company and the positive evolution of its business model, which has stood up well to external factors such as the exchange rate or the inflationary curve of raw material prices. The company has preserved its market shares and even increased them in certain business segments, thanks to a major investment of over €57 million in advertising. Ebro’s European businesses maintain their positive development and the two core businesses continue to reap success in the new market niches they are opening up, in both precooked frozen foods and functional, vegetable and quick-cooking pastas.
Core businesses
Rice
Thanks to the outstanding performance of the European subsidiary and the excellent development of the American business, the year-on-year figures of both sales and EBITDA of the rice division improved considerably during the quarter. Herba achieved a 13.4% growth in EBITDA and the North American subsidiary also grew by 1% in spite of the afore-mentioned delay in starting up some of the production lines at the Memphis rice plant, the poor quality of the previous rice harvest and the major efforts made in promotions to soften the blow of the price rises.
Against a difficult backdrop, Ebro has managed to maintain its market shares in the USA and even increase them in Europe, especially in segments with a greater value added, such as microwave and aromatic rices.
The division sales revenue increased by 8.6% to €653 million while EBITDA rose 5.4% year on year to €92.5 million.
Pasta
This division was affected throughout the nine months by the hike in durum wheat prices, which has been fluctuating at around 320/340 euro per tonne. After raising our prices in two stages in France and three in North America, the positive effect of these measures on the division’s profits will foreseeably be reaped in the fourth quarter, especially in New World Pasta, which has been up against strong competition. Panzani remains strong and is growing, despite the high raw material prices, thanks to the success of its product portfolio.
This scenario of rising prices in raw materials, the restructuring undertaken in Germany and the negative exchange rate effect have dented the division’s EBITDA in the period, which fell to €102.4 million. Nevertheless, turnover grew by 2% to €683 million.
Year-end forecasts
Ebro forecasts a turnover of €1.842 million for 2011, up 9.4% on 2010. Its EBITDA is expected to grow by around 2% to €272 million, while Net Profit on Continuing Operations (comparable Net Profit) is estimated at €140 million, representing a year-on-year growth of 9%.
