• H1 sales and profits fall
  • European slowdown hits Rieber & Søn
  • Plan to increase innovation, "re-align" portfolio

Norwegian food manufacturer Rieber & Søn today (12 July) reported lower half-year sales and profits, blaming low consumer confidence in Europe.

Rieber & Son, which had seen sales increase in the first quarter of 2012, booked lower first-half revenue. On an organic basis, sales fell 7.8%.

Challenges outside Norway weighed on the company's results. It cited "generally lower" consumer confidence in Europe, which, it said, had had the "greatest" effect on its business in the Czech Republic.

Economies in central Europe have been hit by the crisis in the eurozone and by budget cuts at home.

Rieber & Søn said it would increase its focus on innovation to boost existing products but also "gradually redirect" the company's portfolio to "new consumer trends". It added: "A long-term re-alignment of the Group's product portfolio is of central importance in the present strategy period."

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Published: 08:00 CEST 12-07-2012 /Thomson Reuters /Source: Rieber & Søn ASA /XOSL: RIE /ISIN: NO0004951104

Second Quarter Report 2012

Rieber & Søn recorded operating profits (EBIT) of NOK 7m (27) in the second quarter. EPS were NOK -0.05 (0.17).   

Sales in the second quarter were 8.8% down at NOK 984m (1 079). Organic growth stood at minus 7.8%. Structural effects affected sales positively by 1.5%, while currency conversion effects reduced sales by 2.5%.

The gross margin in the second quarter was 57.3% (57.4). The EBITDA margin in the second quarter was 5.4 (8.0), while the EBIT margin was 0.7% (2.5). The return on capital employed (ROCE) stood at 1.1% (4.1%) for the quarter.

Generally lower consumer confidence in Europe has also affected Rieber & Søn. The effect has been greatest on our activities in the Czech Republic, while other markets have been affected to varying degrees. One exception to this is Norway where consumer confidence is strong.

One of the main goals of the company's new strategic platform, «Growth & Efficiency» (which was described in the last interim report) is to strengthen brands and market shares through greater use of market initiatives. At the half-year, investment in sales and marketing was up both in nominal terms and relative to turnover from roughly 16% to around 17%. This increased focus is combined with a more selective approach to the use of market-related  funds.

An increased focus on innovation is another major element of the new strategic platform. The aim is to develop existing categories, while at the same time gradually redirecting the company's portfolio at new consumer trends. In Norway we are already seeing the first results of this process in the form of a higher pace of innovation and stabilised volumes in core categories. A long-term re-alignment of the Group's product portfolio is of central importance in the present strategy period.

The Group's focus on efficiency and continuous improvements will be maintained. Corrective action has been taken aimed at adapting cost levels further, and this will continue in the second half-year.

 

Original source: Rieber & Søn