The chief executive of Brazilian dairy company Vigor has insisted “the main challenges are behind us” after lower growth in the sector weighed on earnings.
Vigor saw underlying EBITDA fall 58% in the first half of 2012 to BRL17.5m (US$14.9m) as freight and warehouse costs pushed up selling expenses. The company also pointed to a spike in milk prices and marketing investment in the second quarter.
Net revenue was up 13.9% at BRL730m but Vigor CEO Gilberto Xandó said its EBITDA was still “below our expectations”.
“These last few months were very challenging for both Vigor and the market in general, presenting lower growth rates for both Dairy and Cheese categories,” he said. “However, we are confident that the main challenges are behind us.”
Xandó said Vigor had invested in distribution and claimed its recent investment in rival Brazilian dairy Itambé Alimentos had yielded “excellent results”. Vigor snapped up 50% of Itambé earlier this year.
He added: “In the coming months, we will continue expanding into other markets, improving point-of-sale execution processes and repositioning our prices, assigning to the products the value that our brands have acquired in recent years.”
Vigor booked net income of BRL103.8m for the first half of 2013, compared to BRL26.7m a year earlier. The bottom line was helped by a one-off gain from the investment in Itambé.