1st quarter 2012 results

Thursday, 03 May 2012.

Operational improvements of both Cocoa and Chocolate business and Natraceutical allowed Natra to increase its operating income by 71% to 3.21 M €

- The Cocoa and Chocolate business, Natra’s main activity, maintained sales of Q1 2011 and achieved to increase the operating income 47.8% to 1.67 M €.

- Natraceutical contributed to Natra’s consolidated accounts with an operating income of 1.62 M €, an increase of 103.6% over the first quarter of 2011, even though the turnover contracted by 19.6% in the first quarter.

- On a consolidated basis, Natra concluded March with an EBITDA of 6.27 M € (+21.0%) and an operating profit of 3.29 M € (+71,2%), despite a slight decline of 2.7% in turnover, which stood at 85.03 M €.

- The net result of the group stood at -0.15 M €, compared to 1.08 M € in Q1 2011, the latter incorporating extraordinary capital gains amounting to 2.50 M € from the sale of Naturex shares in the past year.

- In the last twelve months, Natra reduced by 40.65 M € its financial debt. This figure does not include the financial resources amounting to 11.84 M € that were obtained in April from the sale of Naturex shares, and which will be allocated to the debt service and early debt repayment.

1.- Business performance

The first quarter of 2012 was marked by the business operations improvement of Natra’s Cocoa and Chocolate business, which allowed the beginning of the margins recovery announced by the end of 2011.

In the first three months of the year, revenues stood at 75.58 million euros, levels similar to those of the previous year, mainly due to the transfer to the second quarter of the initiation of certain contracts of the Consumer Goods Division, and the decision to terminate business relationships on specific contracts that did not report a minimum profitability necessary to the business.

However, the strength of the Industrial Goods Division, as well as the highly efficient management of the key elements in the Consumer Goods Division (procurement of raw materials, review of sale prices after the general increases of raw materials last year and the sales mix of the product portfolio of the division) were the engines to improve the profitability of Natra’s Cocoa and Chocolate activity, which placed its EBITDA at 4.45 million euros, compared to 4.15 million euros in the first quarter of 2011 (+7.2%) and closed March with an accumulated increase in the EBITDA margin to 5.9% against 5.5% last year. Operating profit stood at 1.67 million euros, an increase of 47.8%.



Consumer goods division

The Consumer Goods Division, which traditionally concentrates around the 75% of Natra’s Cocoa and Chocolate sales, completed the first quarter of the year with revenues of 53.31 million euros compared to the 57.01 million euros in the same period last year.

The 6.5% decline in the sales of the division were mainly due to delayed initiation of certain contracts of tablets and chocolate bars, which were effective since April, with volumes which are expected to compensate much of the unrealized production in the first months of the year. Also, in the strategy to improve the product mix, the first quarter also reflected the effect of the abandonment of some contracts that did not report a minimum necessary profitability to business, which in recent quarters resulted in a reduction in the sales volume of chocolate bars and spreads with basic formulations for higher-value products.

Despite the explained decline in the turnover, the initiatives to improve the profitability of the product portfolio, combined with an increase in margins efficiency in the whole value chain, enabled the Consumer Goods Division to provide a significant improvement in the EBITDA of the overall Cocoa and Chocolate activity.



In the first quarter of the year, the Consumer Goods Division made further achievements in the penetration of new markets outside Europe, with sales increasing by 9.3% up to March and representing 11.8% of the total turnover of the division. Unlike the European market, the products with which Natra is accessing new export markets respond to a seasonal consumption, linked to the climatology. This is why, as an example, there is no relevant sales figure for China in the first quarter, although it is the second market of development for Natra in export, after North America.

On the contrary, it is worth mentioning the growth in Brazil in the first quarter of the year, Natra’s first stepping stone in Latin America, through one of the leading distribution chains in North America. In March, Brazil represents 1.10% of the sales of the Consumer Goods Division.



Among major markets in Europe, France, Germany and Belgium kept being the main comercial destinations for Natra (19.3%, 16.4% and 15.0% of the turnover of the Consumer Goods Division, respectively), followed by The Netherlands (10.7%). On the contrary, Spain decreased from 10.8% to 8.0% in this division, while sales in UK grew from 3.8% to 5.0% in the first quarter.

DWorth highlighting is the development of the Consumer Goods Division in North America, which becomes the sixth market of this division, evolving from 3.67% in the first quarter 2011 to 6.52% at the end of March 2012.



Industrial goods division

The Industrial Goods Division placed its revenues in 22.27 million euros, an increase of +19.6% over the first quarter of 2011. In these first months of the year, it highlighted the simultaneous growth of the three main ranges in the division (cocoa powder, cocoa butter and chocolate coating), with significant volume increases by product of +11.5%, +66.9% and +32.0%, respectively.

As expected, sales prices in the industry of cocoa derivatives suffered from some adjustments, after months of strong evolution driven by the rising price of cocoa. Still, the significant increase in sales, along with the optimization of production costs, allowed this division to maintain a good EBITDA margin, which contributed to the result of the overall Cocoa and Chocolate activity.



In the first quarter, Spain, the main market of the Industrial Goods Division, which traditionally has brought together more than 50% of division’s sales, grew by over 6%, but it ceded ground to other markets like the United States (+36.8%) and Italy (+52,2%).



For 2012, Natra is confident in obtaining growth in both revenues and operating margins, the latter especially driven by improvements in efficiency in the Consumer Goods Division, punished in the previous year by the strong cost increase of raw materials.

2.- Contribution of the subsidiary Natraceutical

Natra holds a 46.86% stake in Natraceutical, which is fully consolidated in its financial statements.

In the first quarter, Forté Pharma, the industrial business of Natraceutical, closed the first quarter with a net profit of 1.33 million euros, an increase of 64.2% compared to Q1 2011, driven by the recovery of business operations which placed the company's EBITDA at 2.33 million euros, compared to 1.49 million euros last year (+56.4%). Forté Pharma’s revenues receded 18.7% up to March 2012, strongly influenced by the specific drop in sales of one of the products in the weight control range. Excluding this circumstance, the company's sales had remained at similar levels to last year.

On a consolidated basis, Natraceutical closed the first quarter of the year with sales of 9.47 million euros (-19.6%), EBITDA of 1.81 million euros (+64.7%) and net profit of 2.09 million euros, compared to 2.24 million euros for the first quarter of 2011, a difference due to the effect of capital gains from the sales of the stake in Naturex. Regardless of these gains in 2011, the net result of Natraceutical in this first quarter grew 71.3%.

Over the past twelve months, Natraceutical reduced its financial leverage in 24.67 million euros and financial debt on March 31st stood at 60.43 million euros.

Currently, Natraceutical holds 1,365,002 shares in Naturex, representing 17.71% of the share capital. The market value of the asset on March 31 stood at 72.26 million euros.

3.- Profit before taxes

In the first quarter of 2012, Natra’s profit before tax stood at 1.58 million euros compared to 2.88 million euros in the same period last year.

The negative trend of this result is mainly explained by the presence of extraordinary gains in the first quarter of 2011, amounting to 2.50 million euros from sale of both Natraceutical’s and Natra’s shareholding in Naturex.

Under the heading "Net assets held for sale" in Natra’s profit and loss account, the company accounted the results of Naturex as consolidated by the equity method during 2011 and its market value in 2012, following the decision of the Board of Directors of Natraceutical to consider it as financial assets available for sale.

4.- Financial debt

On March 30, 2012, Natra’s debt to credit institutions amounted to 226.09 million euros, of which 60.57 million euros corresponded to Natraceutical. Since March 2011, Natra reduced in 40.65 million euros its financial debt.

This figure does not include the effect of the cash generated from the sale of 230,000 shares in Naturex that Natraceutical settled in early April. The financial resources obtained after this operation amounted to 11.84 million euros, which Natraceutical will allocated to the debt service and early debt repayment.

In April 2010 Natra announced the completion of its debt restructuring. The resulting agreement includes long-term refinancing of all debt and providing new funds through syndicated loans with maturities of four, five and six years in the case of Natra, and a single maturity in 2013 in the case of Natraceutical. Thus, Natra should not face any significant maturity of syndicated funding until 2013.

5.- Consolidated profit and loss account of Natra for the first quarter of 2012



6.- Consolidated balance sheet of Natra on March 30, 2012




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