• Half-year net profit down 31%
  • EBITDA down 11.6%
  • Net sales rise 5% to EUR208m
Ter Beke faced delay in passing on cost increases

Ter Beke faced delay in passing on cost increases

Belgium-based Ter Beke has reported a sharp drop in half-year profits, due to higher raw material costs and one-off charges.

For the six months to the end of June, the meat and ready meals group said net profit sank by 31% on the same period of last year, to EUR3.1m (US$3.9m). Profits were hampered by EUR1.3m of restructuring charges related to the firm's closure of a ready meal facility in France, plus a EUR0.3m impairment charge.

However, profits were also hit by higher raw material costs and customers trading down to cheaper meat products. EBITDA fell by 11.6% for the period, to EUR14.4m.

Despite Ter Beke's difficulties at the bottom line, net sales increased by 5% to EUR208m. The group noted a particularly strong increase in lasagne sales over the six months. Its meat business also saw stronger net sales than in the prior-year period, although volumes were flat.

Looking ahead, the group said it could not offer guidance on its performance in the second-half, due to "unexpected additional rises in raw material prices" within a tough economic climate.

Show the press release

IRST SEMESTER 2012
CONSOLIDATED RESULTS
KEY FIGURES AND HEADLINES
 Ter Beke group:
o The consolidated turnover increases in 2012 by EUR 9.7 million (4.9%) to EUR 208.2
million;
o EBITDA from recurring operating activities amounts to EUR 15.8 million in 2012
compared to EUR 16.4 million in 2011 (-3.2%), primarily due to EUR 1.5 million
increased commercial efforts;
o The first semester contains EUR 1.3 million dismissal and reorganisation costs,
primarily due to the termination of the industrial activities in Alby-sur-Chéran
(France), and EUR 0.3 million reversal of impairments;
o As a result of the foregoing:
 EBITDA amounts to EUR 14.5 million compared to EUR 16.4 million in 2011
(-11.6%);
 EBIT amounts to EUR 5.5 million compared to EUR 7.4 million in 2011 (-
26.6%);
 Result after taxes amounts to EUR 3.1 million compared to EUR 4.5 million
in 2011 (-30.9%);
 Net cash flow amounts to EUR 12.1 million compared to EUR 13.4 million in
2011 (-10.0%);


 Processed Meats Division:
o Increase in turnover at stable volumes;
o Profitability remains under pressure because of a changed product mix, shifting
towards cheaper products, and increased raw material prices and the delay in
passing these on through the sales prices;


 Ready Meals Division:
o Strong turnover and volume increase in lasagne;
o Come a casa® continues to grow in Belgium;
o Industrial activities in Alby-sur-Chéran (France) terminated on 30 June 2012;

Press release 31 August 2012 – 7:30 a.m.
Regulated information
www.terbeke.com

CONSOLIDATED KEY FIGURES FIRST SEMESTER 2012
Income statement in 000 EUR
30/06/12 30/06/11  %
Revenue (net turnover) 208.235 198.528 4,9%

REBITDA (1) 15.828 16.355 -3,2%

EBITDA (2) 14.453 16.355 -11,6%

Recurring result of operating activities (REBIT) 6.533 7.438 -12,2%

Result of operating activities (EBIT) 5.458 7.438 -26,6%

Net financing costs -1.401 -1.389 0,9%

Result of operating activities 4.057 6.049 -32,9%

after net financing costs (EBT)

Taxes -966 -1.541 -37,3%

Result after tax before share in the result of enterprises 3.091 4.508 -31,4%
accounted for using the equity method

Share in enterprises accounted for using the equity method 24 0
Earnings after taxes (EAT) 3.115 4.508 -30,9%

Net cash flow (3) 12.086 13.425 -10,0%

Financial position in 000 EUR

30/06/12 31/12/11

Balance sheet total 251.749 252.936 -0,5%

Equity 92.799 93.879 -1,2%

Net financial debts (4) 56.922 59.619 -4,5%

Equity/Total assets (in %) 36,9% 37,1%Gearing Ratio (5) 61,3% 63,5%

Key figures in EUR per share
30/06/12 30/06/11

Number of shares 1.732.621 1.732.621 0,0%

Average number of shares 1.732.621 1.732.621 0,0%

Net cash flow 6,98 7,75 -10,0%

Earnings after taxes 1,80 2,60 -30,9%
EBITDA 8,34 9,44 -11,6%

(1) REBITDA: EBITDA from recurring operating activities

(2) EBITDA: earnings before taxes + depreciation + amortization + changes in provisions

(3) Net cash flow: earnings after taxes + depreciation + amortization + changes in provisions

(4) Net financial debts: interest bearing liabilities – interest bearing receivables, cash and cash equivalents

(5) Gearing ratio: Net financial debt/Equity

Press release 31 August 2012 – 7:30 a.m.

Regulated information
www.terbeke.com

3/6
NOTES TO THE CONSOLIDATED KEY FIGURES

Turnover

In the first semester, the total group turnover increased by EUR 9.7 million (4.9%) from EUR 198.5 million to EUR 208.2 million.

The turnover of the Ready Meals Division increased by EUR 2.6 million (+4.0%). This increase is mainly due to a strong volume increase in lasagne.

The turnover of the Processed Meats Division increased by EUR 7.1 million (+5.3%) with stable total volumes. The increase in turnover is mainly due to an increase of the sales prices, which were still not enough to offset the rise in raw material prices.

Results of operating activities

The REBITDA decreased by EUR 0.6 million (-3.2%) from EUR 16.4 million in 2011 to EUR 15.8 million in 2012.

In 2012, the group launched a new range of processed meats under the brand name Oligusto®. It concerns meat enriched with olive oil and a lower total fat content. The launch costs for this have been included in the result of the first semester.

The strong media campaign at the start of 2012 in the Come a casa® brand in Belgium has again resulted in an increasing market share. Come a casa® is increasingly fulfilling its leading position as engine of the fresh Mediterranean meals market.

The increased volumes, the implemented price increases and a far-reaching cost control and reduction were not able to entirely offset increased production costs (chiefly raw materials, energy and wages) and the costs of market investments in the first semester. The changed product mix, with an increase in the sales of cheaper products at the expense of more expensive products caused by the general economic climate, curbed margin growth in the Processed Meats Division.

Total non-cash costs decreased slightly by EUR 0.1 million to EUR 9.0 million in 2012. All this resulted in a decrease of the REBIT by 12.2% from EUR 7.4 million in 2011 to EUR 6.5 million in 2012.

On 5 April 2012 the group announced the intention to terminate industrial activity at the site in Albu-sur-Chéran (France). Meanwhile, this industrial activity was effectively terminated on 30
June 2012. The group does retain its commercial activities in France for products that are produced at the Belgian sites of the Ready Meals Division (Marche-en-Famenne and Wanze).

The costs, amounting to EUR 1.1 million, regarding this termination were charged in full to the result of the first semester. These costs relate chiefly to personnel costs.


Together with a number of other dismissal costs (- EUR 0.2 million) and a reversal of impairments on fixed assets (+ EUR 0.3 million) the non-recurrent result in the first semester of 2012 amounts to - EUR 1.0 million (in the first semester of 2011 there was no non-recurrent result).

Together with the aforementioned, this explains the decrease of the EBITDA by EUR 1.9 million (-11.6%) from EUR 16.4 million in 2011 to EUR 14.5 million in 2012 and the decrease of the EBIT by EUR 1.9 million (-26.6%) from EUR 7.4 million in 2011 to EUR 5.5 million in 2012.

Net financing costs
The net financing costs in 2012 are in line with those of 2011.

Taxes
The first semester 2012 tax rate (23.8%) is in line with the tax percentage over the first semester of 2011 (25.5%).
Balance sheet

Under IAS-34, the balance sheet figures of 30 June 2012 are to be compared with those of 31 December 2011. Changes in balance sheet items are limited as there have been no changes in the scope of consolidation since 31 December 2011.

Fixed assets increased by EUR 1.9 million. The tangible and intangible fixed assets decreased EUR 3.3 million as a result of EUR 5.7 million investments, EUR 8.9 million depreciations and write-downs and EUR 0.1 million scrapping of fixed assets. Financial fixed assets increased EUR 0.2 million, chiefly as a result of the increased exchange rate of the Polish Zloty. The group loaned an additional EUR 5 million to its joint venture partner under the long-term co-operation.

Net debt decreased by EUR 2.7 million. This is the result of the EUR 13.9 million incoming cash flow from operations as opposed to a EUR 11.2 million outgoing cash flow, chiefly comprising paid up investments (EUR 5.4 million) and dividend and interest payments (EUR 5.6 million).

The equity difference is chiefly the result of the first semester after tax profit decreased with the dividend that was granted over the previous financial year.

Investments

The group invested EUR 5.7 million in the first half of 2012. The investments relate primarily to the continuation of various efficiency and infrastructure investments in the different sites of the group.

PROSPECTS FOR 2012
In the current economic climate, we are confronted with unexpected additional rises in raw material prices, which prevents us to provide guidance with regard to the earlier announced result forecast.

Original source: http://www.terbeke.com/e/investor_relations/Persberichten/press20120831.pdf