Finnish food group said Q3 operational EBIT "unsatisfactory"

Finnish food group said Q3 operational EBIT "unsatisfactory"

Finnish food group Apetit has announced a fall in operational EBIT for the third quarter of 2016 and said it does not expect to achieve a turnaround in results this year. 

Operational EBIT was EUR1.4m (US$1.5m) compared to EUR1.8m in the equivalent period in 2015, in line with a warning the group issued last month that EBIT was expected to fall as a result of pressure on volumes to the foodservice sector and on profits within its grain business.

However, consolidated third-quarter net sales were EUR91.9m versus EUR75.3m in the year-ago period and profit was EUR1.8m compared to EUR-4m in the third quarter of last year. Operational EBITDA for the third quarter increased to EUR3.1m compared to EUR2.9m over the same period in 2015.

CEO Juha Vanhainen: "When examined on the basis of operations, there were ups and downs in the Apetit group's performance in July to September. From the perspective of the company's strategic development, I can see that by focusing on renewal we are going in the right direction. Unfortunately, based on our clarified outlook for the rest of the year, we do not expect to achieve an actual turnaround in results this year." 

Vanhainen said he was pleased with "the continued good performance of the seafood segment" and that "improvements in operational efficiency have boosted the profitability of operations, even though the volume has been reduced by the higher raw material prices of Norwegian salmon". 

Vanhainen said the "efficiency boosting investments and improvements in processes" carried out in the group's Kuopio plant "have achieved the expected results". 

"During the year, we have faced difficulties on the international grain market," Vanhainen said. "The grain prices and margins, which have remained low, weakened profit also in July-September despite increased sales volumes. The volume of grain crops in the latest crop year is lower than the previous year in our area of supply, while crops in the rest of the world have correspondingly grown. This will also affect the market dynamics during the remainder of the year." 

Vanhainen said Apetiti's food solutions segment "has not yet achieved a turnaround in profitability" but sales in frozen foods had improved. "The Tuorekset product family that was launched in August is helping us to generate new growth in in retail stores' fruit and vegetable sections. However, sales volumes of fresh products to professional food service sector customers have not performed as anticipated so our aim is to improve operating efficiency and our market share," he said. 

A vegetable oil packaging plant extension that was opened in June "quickly enabled us to increase the share of packaged vegetable oil products in net sales", Vanhainen said. "As a result, we were able to increase delivery volumes of packaged products, particularly to the export markets, in this quarter."

Apetit's profit guidance was changed on 19 October. The group said its operational EBIT for the full year "is estimated to be positive but to fall short of the comparison year's level" of EUR2.6m.  Apetit said due to the seasonal nature of its operations, most of the annual profit is accrued in the second half of the year.