R&R Ice Cream described "slow market conditions" in UK

R&R Ice Cream described "slow market conditions" in UK

R&R Ice Cream has reported a fall in underlying first-quarter sales, with the UK-based business pointing to a sluggish domestic market and its exit from less profitable contracts in Germany.

The company reported consolidated revenue of EUR167m (US$186m) for the three months to the end of March,  a fall of 1.3% on the same period last year.

R&R Ice Cream said its top line had been affected by the falling value of sterling and the Australian dollar against the euro, the company's reporting currency.

At constant exchange rates, R&R Ice Cream said its like-for-like sales fell EUR5.9m.

The UK showed a decline of EUR2.2m, on revenue of EUR53.1m, "as slow market conditions and timing of promotions affected the start of the season", R&R Ice Cream said. 

However, the company's adjusted EBITDA was EUR32.5m compared to EUR29m in the first quarter of 2015.

R&R Ice Cream said its "results from operating activities" was EUR18.6m, versus EUR17m a year earlier.

It posted a net profit of EUR2.8m, compared to a loss of EUR13.7m the previous year. Last year's first quarter included "exceptional items, amortisation and non-cash interest" of EUR23.8m. The results for this year's first quarter included exceptional items, amortisation and non-cash interest of EUR10.7m.

R&R Ice Cream, which is owned by private-equity firm PAI Partners, manufactures branded and retailer private-label ice cream and operates in Europe, South Africa and Australia. It also has licensing deals with companies including Mondelez International and Nestle.

PAI Partners has owned R&R Ice Cream since 2013 after buying the business from private-equity peer Oaktree Capital Management.

However, in April, R&R Ice Cream and Nestle announced the formation of an ice cream joint venture, Froneri, operating in more than 20 countries.

The deal will see R&R Ice Cream combined with much of Nestle's ice cream operations. PAI Partners and Nestle will have equal equity stakes in Froneri.

Click here for our analysis on why the transaction will benefit Nestle's ice cream business, which, for example, has been only the third-largest in Europe, behind R&R Ice Cream and Unilever.