September 13, 2006

 

Provimi's net income up 21 percent in H1 2006
 

Press release

 

The Provimi Group, a global leader in the animal nutrition business, has announced its consolidated results for the first half of 2006:

• Net income--Group share increased by 21.3 percent 
   
• Profit from operations, before non-recurring items, increased by 14.3 percent
  
  
• Strong volume growth in pet food
  
  
• Strong growth in developing and emerging countries
  
  
• Further expansions in North American premix and specialty business, adding EUR80 million to sales annually 

Provimi's CEO Wim Troost commented, "The first six months of 2006 showed a continued positive trend and we delivered on our growth strategy with revenues up 15 percent compared with the same period in 2005. Profit from operations increased in line with revenues with margins staying stable. The new acquisitions made a good contribution and the improvement in product mix continued."

 

Provimi Group revenues and profit
	30-Jun-06	30-Jun-05	Change
	(in million EUR)	(in million EUR)	(%)
Revenues	857.1	742.4	+15.4
Profit from operations before non-recurring items	50.4	44.1	+14.3
Profit from operations	49.6	45	+10.2
Net income, Group share	25.6	21.1	+21.3
Earnings a share	0.99	0.81

   

Sales increased by 15.4 percent to EUR857.1 million with most countries showing sales growth through increased volumes. The net impact of acquisitions and divestments added EUR30.6 million, while more favourable exchange rates contributed EUR27.4 million. On a like-for-like basis, sales growth was 7.6 percent.

 

Profit from operations before non-recurring items increased by 14.3 percent to EUR50.4 million. The net impact of acquisitions and divestments contributed EUR3.3 million. Exchange rates had a positive impact of EUR1.5 million, while on a like-for-like basis, profit from operations increased by 3.4 percent over the period.

 

There was particularly strong momentum in the premix and specialty activities in North America, the Netherlands, UK, Brazil, South Africa and Vietnam, as well as in complete feed in Bulgaria and Romania, fish feed in Chile and Pet Food Europe. 

 

In France, total sales volume rose in spite of difficult market circumstances. Exports to Latin America and Asia developed favourably, supported by economic growth in these regions and a stronger US dollar compared with last year. Profit from operations before non-recurring items dropped by 3.5 percent.

 

In Poland, the first half of 2006 saw adverse conditions for customers. Provimi maintained its market share, but overall sales fell due to the indirect impact on the poultry sector by the avian flu scare and the restriction of pork exports from closed borders with Russia and Ukraine.

 

This pressure from the market reduced operating margins, which was only partly compensated by cost savings from the good progress being made with the merger of Provimi's two Polish subsidiaries. As a result, profit from operations fell by EUR2.9 million compared with last year.

 

In the rest of Europe, sales volume showed healthy improvement with continued strong growth in private label pet food, particularly in central Europe, the Netherlands and Italy. Profit from operations improved by 47 percent to EUR20.2 million, including the contribution from new acquisitions. Results improved noticeably in pet food, where new contracts with supermarket chains boosted volume, sales and results.

 

In the feed business, performance was notably strong in the Netherlands, UK, Romania and Bulgaria.

 

In North America, sales volume growth, margin improvement and a favourable long-term purchase contract all contributed to the significant increase of 46 percent in profit from operations to EUR7.3 million, which was further helped by strengthening of the US dollar. 

 

The recent acquisitions, Vita, Virtus Nutrition and Nutrius, in Canada and California, will further strengthen Provimi's leading position in the North American premix and specialty market. Together, these three new businesses add approximately EUR80 million to annual sales with operating margins in line with the average margin of the Group.

 

In the rest of the world, almost all countries reported an excellent improvement with particular strong growth in Brazil, India, Vietnam, South Africa and fish feed in Chile. Profit from operations increased in the first half of 2006 by 11.3 percent to EUR6.9 million.

 

Net financial costs remained stable. Improvements made in average working capital levels and benefits from amendments made to the group's financing facility in 2005 more than offset higher interest costs from the additional debt for new acquisitions in the second half of 2005. 

 

Effective tax rate improved to 28.4 percent of pre-tax income compared with 28.7 percent in 2005, thanks to higher results in lower income tax countries, notably in central Europe.

 

Net income - Group share grew 21.3 percent on-year to EUR25.6 million from EUR21.1 million in 2005.

 

Net debt decreased to EUR416.7 million (including put options of EUR9.4 million) compared with EUR422.3 million in Dec 31, 2005, due to working capital management and exchange rate effects (EUR7.6 million), partially compensated for by the net effect of acquisitions and divestments (EUR14.1 million).  

 

Segment information by geography
Country / Region	Revenues			Profit from operations before non-recurring items
	(in million EUR)			(in million EUR)
	30-Jun-06	30-Jun-05	Change	30-Jun-06	30-Jun-05	Change
			(%)			(%)
France	76.3	70.9	7.6	8.2	8.5	-3.5
Poland	168	178.2	-5.7	7.8	10.7	-27.1
Rest of Europe	377	305.4	23.4	20.2	13.7	47.4
North America	100.1	83.1	20.5	7.3	5	46
Rest of the world	135.7	104.8	29.5	6.9	6.2	11.3
Total	857.1	742.4	15.4	50.4	44.1	14.3

 

During the second half of the year, Provimi will complete integration of its recent acquisitions. This, together with the joint venture in fish feed with AquaChile, will deliver further improvement to the product mix, allow growth in higher margin segments and achieve synergies. Although there remains some uncertainty on crop prices in central and eastern Europe, the Group will continue to be cash generative and will reinvest its free cash flow in accretive acquisitions.

 

Reorganisation of the Group's procurement structure has been completed and negotiation of new contracts with a significantly reduced supplier base is on schedule and will start to meaningfully contribute to results in coming months.

 

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 almost 9,000 people and has annual sales of EUR1.6 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 all species, including ruminants, poultry, swine, fish and pets. 

 

For further information, visit: www.provimi.com