1st half 2013 Results

Tuesday, 27 August 2013.

Operating profit grew by 33% with an ongoing improvement of the businesses and a strong focus on financial deleveraging.

  • Natra concluded the first half of 2013 with a turnover of 170.74 M€ (+1.1%) and EBITDA of 12.81 M€ (+15.1%). Operating profit stood at 7.16 M€ (+33.2%) and net result at negative 1.16 M€ compared with losses of 5.38 M€ in the first half of 2012.
  • The cocoa and chocolate activity, Natra’s main business, closed the first half of the year with sales of 152.58 M€, at similar levels to the previous year, and a slight improvement of 1.7% in EBITDA, up to 10,21 M€.
  • Natraceutical contributed to Natra’s consolidated results with a turnover of 18.16 M€ (+7.7%) and EBITDA of 2.60 M€ (+140.0%).
  • In the first six months of the year Natra reduced its consolidated net debt by 8.2% to 148.37 M€.

1.- Evolution of the cocoa and chocolate business

In the second quarter of 2013, the cocoa and chocolate business continued the trend expected by the company regarding growth in profitability in the consumer division and some margins correction in the industrial division. This last fact, after two years in which the industrial business of cocoa derivatives had enjoyed record highs in prices backed on a strong demand for cocoa powder.

The business EBITDA stood at the end of the first half of the year at 10.21 million euros, up 1.7% from the first half of 2012, particularly driven by good operating results in the consumer division.

In terms of turnover, the strength of the industrial goods division in the markets where it operates allowed Natra to counteract the effect of some weak consumption and of the rationalization of the product portfolio in the consumer goods division and to close the first half of the year with a turnover of 152.58 million euros, a slight growth of 0.3% over the same period last year.

All in all, the operating income of the cocoa and chocolate business stood at 4.80 million euros at the end of June, an increase of 3.2% over the first half of 2012. 

1st half 2013 Results

Consumer goods division

The consumer goods division, which traditionally concentrates around 75% of the sales of Natra’s cocoa and chocolate business, ended the first half of the year with a turnover of 107.00 million euros, down 2,3% from the same period of 2012.

This decline was mainly due to a weak consumer spending in Europe, the effect on sales of the product portfolio rationalization performed in recent quarters, as well as changes in the order flow in the U.S. market after the announcement of the upcoming start of production in Canada. These delays are primarily due to new product launches to be managed directly from Natra’s new plant in Toronto.

However, efforts to protect the profitability of this division in the last two years continued to give significant results, which allowed the company to offset the margins correction in the industrial goods division.

Sales evolution by product category

The consumer goods division continued to enjoy a good evolution of the spreads and tablets categories (61.6% of the combined turnover of this division), with growths of 7.3% and 9.1% respectively in the first half of the year. However, sales fell by about 15% for the aggregated bars and chocolates ranges, mainly due to the aforementioned streamlining of the product portfolio towards a more profitable product offer.

It is estimated that the mentioned portfolio review in the consumer goods division will cease having its effect on the business volumes at the beginning of next quarter.

Regarding the chocolates range, it is worth remembering that turnover is highly affected by the seasonality of the consumption of this product in Asia, Natra’s main growing market in this category. Therefore, one must analyze the evolution of this category for the whole year, in which the company expects a significant growth in the second half of the year.

 

1st half 2013 Results

 

Sales evolution by geographical markets

The evolution of the turnover in the main geographical areas reflects the information above: weak consumption in Europe and rationalization of the product portfolio, which has mainly affected this market. Also changes in the order flow in the American market by the next start of production in Canada. In the Asia-Pacific market, the still non-significant volumes within the whole division mainly reflected the weak performance of the Australian market at the beginning of 2013 by a temporary situation.

 

1st half 2013 Results

 

Industrial goods division

The strength of the industrial goods division in the markets where it is present led Natra to repeat in the second quarter the growth already achieved in the first quarter of the year and to close the first six months of the year with a turnover of 45.58 million euros, 7.2% higher than the first half of 2012.

Sales evolution by product category

As expected, this division’s sales were especially marked by the recovery of cocoa butter and cocoa paste and the correction of the cocoa powder line, after two years of strong growth by excess demand in the market.

Sales evolution by geographical markets

The distribution of the turnover by geographical area is consistent with the evolution of the different product ranges commented above, as America, and particularly the United States, has traditionally been the first market for Natra’s cocoa powder. On the contrary, EMEA and Asia-Pacific reflected the sales growth in butter and cocoa paste, the former including also the sales of industrial chocolate, mainly in Spain.

1st half 2013 Results

2.- Contribution of the subsidiary Natraceutical

Natra consolidates in its financial statements a shareholding stake of 50.6% in Natraceutical.

Natraceutical closed the first half of the year with a contribution to Natra’s consolidated results of a net profit of 2.38 million euros compared to losses of 8.82 million euros in the first six months of 2012. Turover stood at 18.16 million euros, a growth of 7.7% over the first half of 2012. Forté Pharma’s gradual recovery in sales, together with the operational optimization conducted in the last two years, led Natraceutical’s EBITDA up to 2.51 million euros, compared to 1.08 million euros in the first half of 2012. EBITDA margin more than doubled from 6.4% to 14.3%.

The cancellation of the syndicated loan in December 2012 allowed the company to reduce the net figure between financial expenses and financial income from negative 2.31 million euros in the first half of 2012 to positive 0.09 million euros in the same period of 2013.

Natraceutical published its first half year results on July 25th, 2013. This information is available on the investor information section on the company website: www.natraceuticalgroup.com

3.- Profit before taxes

In the first half of 2013, Natra’s profit before taxes stood at 1.36 million euros, compared to losses of 8.52 million euros in the same period last year.

The positive evolution of this result was mainly due to the group's operational improvement, the reduction of financial costs following the cancellation of Natraceutical’s syndicated loan and also the exiting of the stake in Naturex from the scope of consolidation, which in the first half of 2012 raised a loss of 7.29 million euros for its value change in the stock market.

4.- Financial debt

On June 30, 2013, Natra’s consolidated net financial debt amounted to 148.37 million euros, of which 0.99 million euros corresponded to Natraceutical.

Between the years 2011-2012 the company made a firm commitment to optimize its financial structure, which resulted in a debt reduction amounting to 105 million euros, 25 million from the cocoa and chocolate business and 80 million through Natraceutical.

Natra remains steadfast in this purpose and it is working hard to regain optimal debt ratios in the short term.

5.- Relevant facts after the end of the semester

Today, August 27, 2013, Natra has submitted a Relevant Fact to the Spanish Stock Exchange Commission informing about the unanimous approval by the seventeen financial institutions that make up its banking syndicate regarding the flexibility of its debt repayments until the final maturity date in 2016. All of this in order to adjust the repayment schedule to the business and its existing new projects. The agreement is subject to the execution of the contract documents, which is expected to take place during the month of September.

As this fact has taken place after the end of the semester, the balance sheet on June 30, 2013 included as short-term debt those repayments initially planned in the syndicated loan for the first half of 2014, which have been substantially reduced in the new design. The balance sheet and the annual report of 2013 year-end will reflect the new situation up to 2016, following the new intermediate amortizations plan.

On the other hand, in the framework of the corporate transaction between Natraceutical and Naturex of December 2009, through which Natraceutical integrated its ingredients division into Naturex, after the end of the first half of 2013 Natraceutical formalized with Naturex the sales contract of Natraceutical Industrial, SLU, last asset linked to Natraceutical’s former ingredients division. Natraceutical Industrial was holding, among others, of the production plant in Valencia that the French company was leasing since 2010.

The deal amounted to 8.5 million euros to be paid in June 2017. Standard guarantees in this type of transactions were established, which would reduce the price of the deal in case of potential contingencies materialize.

6.- Consolidated profit and loss account of Natra, SA of the first half of the year 2013

1st half 2013 Results

7.- Consolidated balance sheet of Natra, SA on June, 30, 2013

1st half 2013 Results

1st half 2013 Results

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