Year 2013 results

Saturday, 01 March 2014.

A new rally in the price of cocoa in the second half impacts on the cocoa and chocolate business results.

  • The cocoa and chocolate activity, Natra’s main business, closed the year with sales of 329.62 M€ (+1.2%) and a contraction in EBITDA of 14.9%, (24.09 M€), mainly due to the negative impact of the price increase in raw materials.
  • Excellent performance by Natraceutical, which contributed a turnover of 31.37 M€ (+4.8%) and an EBITDA of 2.75 M€ (+128.1%) to the consolidated Natra group.
  • Natra closed 2013 with a consolidated turnover of 360.99 M€ (+1.5% over the previous year), an EBITDA of 26.83 M€ (-9.1%) and a net loss of 1.07 M€, against 4.14 M € profits at the end of 2012, due to extraordinary results in the previous year and higher income tax in 2013.
  • Following the total cancellation of Natraceutical’s syndicated loan in December 2012, throughout 2013 Natra reduced its net financial debt by a further 14.93 M€, closing the year at 146.77 M€. The company agreed a new maturity plan of its financial structure to adapt it to the growth expected from the internationalization projects in America and Asia.

1.- Evolution of the cocoa and chocolate business

Industry background

As it has been informed in recent months, 2013 was a complex year for the cocoa and chocolate business, mainly due to the consequences of the concentration processes undertaken by large groups operating in the industry and the speculation to which cocoa derivative products have been subject, which has led to enormous pressure on prices.

In such a scenario, the price of cocoa futures on the London Stock Exchange, on which Natra trades, fluctuated throughout 2013 between 1382-1800 pounds per tonne, very similar to the 1339-1748 pounds per tonne registered the previous year. However, despite the similarity of these values, market behaviour was quite different in both years. While in 2012 cocoa registered its highest price in early September before quickly returning to the levels of 1400-1600 pounds per tonne, the second half of 2013 began with a strong upward trend before reaching the maximum registered three sessions before the end of the year. And not only was there no correction as in the manner of 2012, but rather the price increase has continued during the beginning of 2014, marking a new high of 1,871 pounds per tonne on February 12.

The numerous news items published in recent months spreading the fear of a large shortfall in production and consumption in the coming years have once again attracted the interest of a growing number of speculators, thus multiplying the bullish effect of a potential deficit in the 2013/2014 harvest which, so far, does not seem to justify the behaviour of the market.

In fact, with the main harvest about to conclude in Ivory Coast and Ghana (60% of the world crop), production is proving far superior to that of the previous season.

At the same time, the cocoa derivatives industry had to cope with the gradual rise in the price of cocoa butter throughout the year: in 2012, the price doubled its previous levels and registered a maximum in October that had not been reached in the last five years. By contrast, the price of cocoa powder -a product obtained in the same process as butter-, continued the downward path begun in mid-2011, and only as of November began to register a recovery that surprised everyone by its strength, although in recent weeks it has shown signs of weakness.

In addition to the increased funding requirements that come with rising raw materials prices, the significant variations in the prices of cocoa butter and cocoa powder have a direct effect on margins in the industry. In 2012, this effect significantly increased the profits of our industrial division, while in 2013 the contrary occurred, with profits returning the historical standards.

As for the consumer division, rising cocoa prices affected every link in the chain in a year in which levels of consumption and the actions of the competition greatly limited the possibility of increasing price to the final consumer.

This phenomenon had also a significant impact on powdered milk, another of the key ingredients in many types of chocolate, which suffered an increase over 25% compared to 2012, thus increasing costs and pressure on the division’s profits.

Download the full document (PDF)