1st half 2014 results

Sunday, 31 August 2014.

Despite retaining aggregated volumes and selling prices, the increase of procurement costs and the starting up of the factory in Canada at the back of the strong deterioration of the operating result.

  • In line with the performance of the first quarter, the cocoa and chocolate business ended the first half with a slight decline in sales of 1.1%, placing them at 150.88 M€ 152.58 M € to June 2013. However, the increase in raw materials and the costs associated with the starting up of the new plant in Canada caused a negative impact of 9.25 M€ in the EBITDA of the business, which stood at 0.96 M€ compared to 10.21 M€ in the first half of 2013.
  • Natraceutical contributed a turnover of 17.74 M€ compared to 18.16 M€ in June 2013, while the company managed this decrease in sales not no affect its gross margin, which stood at 76%. EBITDA stood at 2.03 M€ M € compared to 2.60 M€ in the same period last year by the decrease in sales.
  • Natra closed the first half of 2014 with a consolidated turnover of € 168.61 M€ (-1.2% over the same period last year), EBITDA of 2.99 M€ (-76.6%) and a net loss of 11.41 M€ compared with losses of 1.16 M€ at the end of June 2013, a direct result of the increased costs referred above.

1.- Evolution of the cocoa and chocolate business

Natra’s cocoa and chocolate business closed the first half of 2014 with sales of 150.88 million euros, down 1.1% from the same period last year. While aggregated volumes and selling price were similar in the first six months of last year, there was some compensation between divisions.

The consumer division ended June with a turnover of 98.47 million euros, 7.8% less than the figure for June 2013. Meanwhile, the industrial division ended the first half with sales of 52.41 million euros compared to 45.58 million euros in the same period in 2013 (+14.9%).

Following the trend of previous quarters, the evolution of turnover in the consumer division was backed in the lack of strength of consumption in Europe, responsible for 88.5% of sales in the division, whose turnover decreased by 6.3%.

By contrast, the industrial division continued to strengthen its position in Europe, where sales rose 9.8% and represented 92% of the turnover of the division. This strong performance continued to be underpinned by the growth in the chocolate coatings range, for which Natra supplemented in 2013 its production capacity in Spain through its factory in France.

After the progressive rise of cocoa prices in 2013, in the first half of 2014 the cost of this raw material increased an additional 20%. This upward trend was also seen in other products, like hazelnut, whose increase was especially evident since March due to a heavy frost in the production area of the Black Sea. Cocoa and hazelnut represent around 50% of the procurements of Natra.

In recent years, and most notably in 2014, the international financial crisis and the strong speculative upward trend in cocoa prices and other commodities have significantly affected the balance sheets of the companies and the profitability of the chocolate industry. This situation has also conditioned the evolution of Natra’s business. Higher financial needs in this complex environment has been one of the major limitations in the procurement of raw materials for Natra and, subsequently, in the protection of margins. This situation will be corrected with the recent agreement to finance the working capital of the company, announced on August 29 and referred to in section five below.

Despite the stability of sales, the strong rise in raw materials in recent quarters and also the costs associated with the starting up of the Canadian factory had a negative impact of 9.25 million euros in production costs in the first half of the year, which resulted in a decrease in EBITDA at the end of June to 0.96 million euros compared to 10.21 million euros in the first half of 2013.

Sales and EBITDA evolution
(1H 2013-2014, in M€)

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