3rd quarter 2014: Results note

Monday, 03 November 2014.

Sales growth of 5% in each of the two divisions and 5.73 M€ EBITDA in the third quarter, compared to 0.96 M€ from January to June.

  • The turnover of Natra’s cocoa and chocolate activity grew by 5.2% from July to September following the positive performance of its two divisions. This helped offset the slight sales decline in the first half and the company closed the first nine months of the year with sales of 240.71 M€ in its cocoa and chocolate business, 1.2% higher than in the same period last year.
  • 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.
  • EBITDA for the cocoa and chocolate business progressed from 0.96 M€ at the end of June to 6.69 M€ at the end of September, despite the ongoing pressure in the costs of raw materials.
  • Natraceutical improved its turnover by 3.2% between July and September and partially offset the sales decline from the first half. Sales in the first nine months totaled 24.75 M€ compared to 25.30 M€ in September 2013. The company's EBITDA stood at the end of September at 2.84 M€ compared to 3.50 M€ in the same period last year, mainly due to the sales decline in the first half and increased advertising spending in the third quarter.
  • Natra closed the first nine month of 2014 with a consolidated turnover of 265.47 M (+0.8% over the same period last year), EBITDA of 9.53 M€ (-52.4%) and net loss of 11.80 M€ compared with losses of 1.61 M€ at the end of June 2013, of which 11.41 M€ were registered in the first half of the year.

1.- Evolution of the cocoa and chocolate business

Natra’s cocoa and chocolate business set sales between July and September 2014 at 89.83 million euro, 5.2% higher than those in the same months last year. This allowed the company to offset the 1.1% decline in sales in the first half and to close the first nine months of 2014 with total turnover of 240.71 million euro, compared to 237.94 million euro in the same period of 2013 (+1.2%).

This positive progression in the third quarter was supported by the two divisions of Natra’s cocoa and chocolate business. Specifically, the consumer division set its sales from July to September at 62.03 million euro (+5.4% compared to the same period last year), while the industrial division reached 27.80 million euro (+ 4.9%).

Contrary to what happened in the previous two quarters, between July and September it was the EMEA region (Europe, Middle East and Africa) the one that promoted the recovery of sales in both divisions. Specifically, this region represented 82.8% of sales of the cocoa and chocolate business in in the third quarter and achieved a growth of 8.7%. This was mainly driven by the entry into force of new manufacturing contracts for other food companies, as well as by the significant growth in the chocolate coatings range of the industrial division, a Europe-based business due to the specific characteristics of the product manufacturing and transportation.

Meanwhile, the Americas region represented 14.3% of the sales from July to September and rose 1.4%, after the slowdown in the first half of the year due to the delay of contracts linked to the start-up of the new factory in Canada.

By product categories, the slabs and spreads ranges represented each around 30% of sales in the consumer division and grew by 30.7% and 11.5% respectively. The countlines range represented 20% of division’s sales and showed a more moderate increase of 1.4%, while the chocolates range contributed another 20% to the division’s turnover and fell by 19,8%.

In the industrial division, the strong sales performance between July and September was driven by the chocolate coatings range, which contributed 52.3% of the division’s turnover and grew 31.2% in the third quarter. In their turn, cocoa derivatives (cocoa- mass, -butter and -powder) contributed 47.7% of sales in the division and were down 10.2% in the quarter due to the combined effect of sales growth of cocoa butter and decline of cocoa powder.

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.

Although the 2013/2014 cocoa harvest was good and consumption was lower than expected, the interest of speculators did not diminish during the third quarter. On the contrary, the futures price in London achieved a new high in forty-two months in September and it increased a new 7% at the end of the quarter.

The positive evolution of sales in the quarter and the containment of operating costs set the EBITDA at 5.73 million euro between July and September 2014, compared to 0.96 million euro between January and June this year and 6.31 million euro between July and September 2013.

Sales and EBITDA evolution
(9M 2013-2014 in M€)

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