NETHERLANDS: Pension costs hit Sligro profits
Sligro suffers a fall in profit over 2013
Dutch retailer and wholesaler Sligro Food Group has reported a fall in annual profits despite higher sales as pension costs hit the bottom line.
Profit for 2013 reached EUR68m, down 0.9% compared with 2012.
CEO Koen Slippens said: "Sligro Food Group was able to maintain its results at a good level in 2013 in a market in which consumer spending was under increasing pressure as the year progressed. Without the additional (accounting) pension costs, profit would actually have increased."
Operating profit from Sligro's food retail arm doubled to EUR8m, which the firm put down to an improved gross profit margin.
The company said there were signs an economic recovery was on its way but said it did not believe it would have a positive impact on spending during 2014. Sligro added it had "learned to live with stagnating or deteriorating economic conditions by taking prompt action".
"Although there are signs of an economic recovery, we do not expect it to drive growth in consumer spending in 2014. We are busy implementing a number of improvements and have announced two valuable acquisitions, giving us energy to address the challenges that face us in the year ahead," Slippens.
Profit for the 2013 financial year was € 68 million, down 0.9% compared with 2012. As reported on 2 January 2014, sales in 2013 were 1.3% higher at €2,498 million. Organic growth was 0.9% (excluding the effect of (changes in VAT on) tobacco products). Market conditions in the second half of the year were worse than in the first half, with the consequence that the modest increase in profit in the first half was followed by a slight fall in the second.
Koen Slippens, CEO
‘Sligro Food Group was able to maintain its results at a good level in 2013 in a market in which consumer spending was under increasing pressure as the year progressed. Without the additional (accounting) pension costs, profit would actually have increased.
For the first time, free cash flow exceeded a ‘magical level’ amounting to € 101 million, enabling us to propose an unchanged dividend of € 1.05 per share. We also propose to pay an interim dividend for 2014 of € 0.40 in October. Although there are signs of an economic recovery, we do not expect it to drive growth in consumer spending in 2014. We are busy implementing a number of improvements and have announced two valuable acquisitions, giving us energy to address the challenges that face us in the year ahead.’
x € million Change in %
Sales 2,498 1.3 Gross operating result (ebitda) 142 (0.3) Operating result before amortisation (ebita) 101 1.7 Operating result (ebit) 89 0 Net profit 68 (0.9) Free cash flow 101 5.2 Shareholders’ equity 571 3.0 Net interest-bearing debt 38 (45.5) Earnings per share (x € 1) 1.55 (0.6) Dividend per share (x € 1) 1.05 0
Gross profit was € 21 million higher at € 578 million. Gross profit as a percentage of sales increased by 0.5% to 23.1%. Of this increase, 0.4 percentage points reflected changes in VAT on and lower sales of tobacco products, which together had the effect of reducing sales by € 43 million.
Total operating expenses were also higher, increasing by € 21 million to € 493 million. As a percentage of sales, this equates to an increase by 0.6% to 19.7%, of which the effect of tobacco products accounted for 0.4 percentage points. There were also changes in the foodservice sales mix, an increase of €4 million in the (accounting) pension costs due to revised actuarial assumptions and higher ICT expenses.
The operating result was unchanged at € 89 million. The share in the results of associates was € 2 million lower, due to a lower result at one of our associates and the start-up loss at Superdirect.
The Foodservice operating result was € 4 million lower at € 81 million, mainly attributable to the market conditions, the changes in the foodservice sales mix and higher (accounting) pension costs.
The Food Retail operating result doubled to € 8 million, thanks to an improved gross profit margin and implementation of our Medium-Term Plan.
Earnings per share were € 1.55, one euro cent less than in 2012. We propose to keep the dividend at € 1.05 per share, consisting of a regular dividend of € 0.80 (2012: € 0.80) and a variable dividend of € 0.25 (2012: € 0.25).
With a view to ‘equalising’ the cash flow, we propose to pay the dividend in two instalments from 2014 onwards, paying an interim dividend for the first time on 20 October 2014, when Sligro Food Group will have had a stock market listing for 25 years. We propose to fix the interim dividend at half of the regular dividend for the previous year, which means that the interim dividend this year will be € 0.40 per share.
The high free cash flow has almost halved the net interestbearing debt to € 38 million. The combination of high free cash flow and a low level of debt means that our financial position in these uncertain times is exceptionally strong.
We depend directly or indirectly on Dutch consumer expenditure. We do not expect the current signs of economic recovery to have a positive impact on spending in 2014 and there are few special circumstances that are likely to have an effect. In recent years we have learned to live with stagnating or deteriorating economic conditions by taking prompt action. In these markets, we are working hard to implement the EMTÉ Medium-Term Plan, the Sligro revitalisation project and our cost-reduction programme and we will be busy with the integration of Rooswinkel and Horeca Totaal Sluis – all worthwhile challenges. The acquisitions we have made last year and this year will contribute around € 55 million to group sales in 2014. This will be offset by a reduction in sales of some € 25 million due to the effect of VAT changes on tobacco sales in the first half of 2014. The (accounting) pension costs will increase by a further € 2 million, but this will not involve the payment of additional contributions. As usual, we prefer not to give a firm prediction of the full-year result.
Original source: Sligro Food Group
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