ICELAND: Alfesca cautious despite FY profit rise
Alfesca, the Iceland-based food group, today (2 September) booked rising annual sales and earnings, despite tough trading weighing on the company's results in its fourth quarter.
The snacks-to-seafood group posted net profit of EUR28.6m (US$41.5m) for the year to the end of June, a rise of 28%. Net sales were up 9% to EUR647.4m.
However, CEO Xavier Govare said "the adverse trading environment" in the fourth quarter, which saw rising oil costs, food inflation and declining consumer confidence, had hit Alfesca during the period.
"All the negative economic factors reached their peak with the price of oil reaching US$150 per barrel, inflation rising above 4% and consumer confidence dropping to its lowest level," Govare said. "As a consequence, our sales in Q4 were negatively impacted due to these factors and due to [the] unfavourable positioning of Easter in Q3 this year as compared to Q4 last year."
For its fourth quarter, Alfesca posted a 5.4% fall in sales to EUR132m but said revenue was "stable" on a like-for-like basis. The company added that fourth-quarter net profit was also "stable" on the year, reaching EUR3.5m.
Looking forward, Govare said he expects "the adverse trading conditions continuing for some time". He added: "We expect consumption levels to remain low in the coming months with raw material and utility costs staying at relatively high levels as they do not currently show any sign suggesting a sharp decrease.
"In response, it will be necessary for us to recover such continued inflationary costs through necessary price increases, which is inevitably a difficult exercise in the poor retail environment."
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