9 months 2013 results

Monday, 28 October 2013.

The operational efficiency in both the chocolate and Natraceutical’s businesses allowed Natra to maintain operating income despite the worsening of the gross margin following cocoa’s sharp prise rise.

  • Natra completed the first nine months of the year with a consolidated turnover of 263.24 M€ (+1.5% over the same period last year), EBITDA of 20.01 M€ (-1.1 %) and a negative net result of 1.61 M€ compared to profit of 1.92 M€ at the end of September 2012.
  • Cocoa and chocolate, Natra’s core business, closed the first nine months with sales of 237.94 M€ (+0.9%) and a contraction in EBITDA of 10.5%, standing at 16.52 M€, mainly as a result of the negative effect of rising cocoa prices on the business’s gross margin.
  • Excellent performance of Natraceutical, which contributed to Natra’s consolidated accounts a turnover of 25.30 M€ (+7.2%) and EBITDA of 3.50 M€ (+96.6%).
  • Over the last twelve months, Natra reduced its financial leverage 68.76 M€, whereby the net debt of the consolidated group at September 30, 2013 amounted to 149.55 M€, of which 1.13 M€ corresponded to Natraceutical.

1.- Evolution of the cocoa and chocolate business

Industry Outlook

The third quarter of 2013 was a difficult one for the cocoa and chocolate business, mainly due to the consequences of the concentration processes carried out by major industry groups and continuing uncertainties about the evolution of the harvests in major producing countries. These events led to some speculation around cocoa products, with a lot of pressure on the price of this raw material.

Specifically, if the second major concentration this year in the cocoa industry is confirmed, approximately 50% of the global grinding would be left to the two major companies in the sector. Both firms also possess almost full milling capacity of Ivory Coast and Ghana, bordering countries that account for about 60% of world cocoa production.

Given the effects that these movements might have for the industry, the cocoa price soared by 15% between the months of July to September, following a slight increase of 1% in the first half of the year. At the end of September, the price of cocoa on the London futures market (LIFFE) stood at 1,684 pounds a tone. The upward rally continued further and in the first week of October cocoa bean price increased 4% extra, up to 1,737 pounds. The LIFFE had reached 1,700 pounds in September 2012, but it was not since September 2011 that this level was not clearly exceeded. Net long positions within non-industrial investors were at historic highs in September 2013.

Evolution of cocoa price in the London futures exchange (January-September 2013)

In parallel, the cocoa derivatives industry had to address the gradual increase of cocoa butter prices during the year. According to the National Confectioners' Association, that represents leading confectionary manufacturers in the United States, butter price increased by 70% over the last year, standing now at near 6 euros / kg.

All this has been transferred to the food industry with significant pressures on production costs of chocolate products, and in the case of Natra, on gross margins of its consumer products division.

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