Royal Numico announces a strong sales and earnings growth for the first half year 2001. Sales increase by 30% to EUR 2,202 million with an 8.2% organic growth. EBITA grows by 37% to EUR 362 million. Numico reiterates its outlook for the full year 2001 of at least 15% sales and cash earnings growth.

Financial highlights for the first half year 2001


  • Net sales up 30% to EUR 2,202 million
  • Organic sales growth of 8.2%
  • GNC same store sales up 3.3%
  • Operating result (EBITA) up 37% to EUR 362 million
  • Cash earnings up 314% to EUR 700 million
  • Cash earnings per share (CEPS) rise by 274% to EUR 4.32
  • Extraordinary profit from divestments: EUR 494 million (less provisions)
























Highlights (EUR million) First half year 2001 Change %
Net sales 2,202 30
EBITA 362 37
Cash earnings 700 314
Cash earnings before
extraordinary items		 206 22

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Proforma results from continuing business for the first half year 2001 (excluding extraordinary items)


  • Cash earnings up 28% to EUR 216 million
  • Cash earnings per share (CEPS) up 15 % to EUR 1.33


Commentary of Mr J.C.T van der Wielen, President and CEO
“As indicated earlier this year, the first half of 2001 would not be easy compared with a very strong first half of last year. Therefore I am satisfied with the actual results and in particular the organic growth figure, which provides me with some comfort for the second half of the year. Strong performances in Europe and the Far East, despite the weak Rupiah, have contributed to this growth.


For the second half year I expect a higher contribution from our US business as a result of the initiatives taken in the first half year which should strengthen Numico’s position in the nutritional market in the USA. The other product groups are expected to continue their good progress. Cost savings and a reduction of working capital remain top priorities.“


Outlook
We reiterate our outlook for the full year 2001 and expect a sales and cash earnings growth, barring unforeseen circumstances and excluding extraordinary items, of at least 15%.

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SALES DEVELOPMENT
Numico’s sales from continuing business in the first half year 2001 increased by 30% to EUR 2,202 million compared with sales of EUR 1,695 million in 2000. Adjusted for acquisitions and currencies, sales grew by 8.2% in the first half year 2001.




































Region sales* (EUR million) First half year 2001 Change %
Northern Europe 307 7.8
Central Europe 122 4.3
Southern Europe 166 10.8
Eastern Europe 103 24.3
North America 1,342 48.2
Asia-Americas-Africa 162 4.1
Total 2,202 30

* net sales from continuing business


Europe
Sales from continuing operations in Europe increased strongly by 10% to EUR 698 million. The organic growth rates in Northern Europe (8%), Southern Europe (11%) and Eastern Europe (14%) are very encouraging. The increase is mainly volume related, driven by successful new concepts and improved market share.


Asia Pacific, Americas and Africa
Sales grew by 4% to EUR 162 million. However, the negative impact of currency effects, principally the Rupiah and the Real, had a material influence on our sales. Organic sales growth was 14%.


USA
Sales in the USA from continuing operations grew by 48% to EUR 1,342 million compared with EUR 905 million in the first half year 2000. The first half year includes additional five-month Rexall and two-month Enrich results. Excluding currency (7%) and acquisitions (38%), sales increased by 3% in the United States.


GNC
Same store retail sales were up 3.3% world wide for GNC stores. 244 net new stores were added to the GNC retail system, including 140 new GNC stores at Rite Aid. This brings the total number of GNC stores to 5,348.


Rexall Sundown
Total sales at Rexall Sundown increased 5% to US$ 288.6 million. Weakness in the food, drug and mass channel, in which Rexall Sundown competes, contributed to margin decline. The latest market data is less negative, implying a bottom in market decline


Unicity
The integration of Enrich and Rexall Showcase was completed July 1, 2001. The integrated company, called Unicity, had first half year sales of US$ 152 million. Significant savings from the combined operations resulted in 183% higher operating earnings for this company versus last year’s first half.









































PRODUCT GROUPS
Product Group First half year 2001 Sales
(EUR million)		 Change %
 		 EBITA
margin
Infant Nutrition 487 8.7 18
Clinical Nutrition and Diets 232 16.1 23
Consumer Diets and Sports Nutrition 612 54.9 13
Vitamins and Herbs 795 38.7 17
Other 76 (2.9) 4
Total sales 2,202 29.9 16.5

Infant Nutrition
Sales in the infant nutrition group grew by 8.7% to EUR 487 million, in line with the expectations, despite negative currency effects in Indonesia, Turkey and Brazil of EUR 9 million. Sales of infant milk formula products increased by 8.3% world wide to EUR 333 million. Last year new concept launches, such as Stage 3-concept and Omneo, helped contribute to the growth of this category. Market shares show positive trends in a number of important markets including the UK, the Netherlands, Germany, Southern Europe and Indonesia. Cereals growth was flat in the first half year at EUR 55 million, whilst meals and drinks showed a strong growth of 16.7% to EUR 99 million.


Clinical Nutrition and Diets
Sales in this product group increased by 16.1 % to EUR 232 million. Market shares improved in all major markets including the UK, the Netherlands, Germany and France. Our disease specific range is a key driver of further growth and currently represents 15% of this product group. The metabolic and dietary product sales continue to perform excellently with over 20% growth.


Consumer Diets and Sports Nutrition
Sales in this category grew by 54.9% to EUR 612 million. Excluding acquisitions this segment shows a good growth of 16.6%. The sports nutrition segment will benefit from new introductions in the second half year.


Vitamins and Herbs
The market developments in this segment were generally not very favourable. Total sales amounted to EUR 795 million and were almost flat compared with the same period of last year. Numico’s share in this segment in the Food, Drug and Mass channel was under pressure.


Divestment Nutricia Dairy & Drinks
On the 10th of August 2001 the European Commission announced its approval of the proposed transaction. We are awaiting approvals from certain Eastern European countries which are expected to follow shortly, after which the transaction can be completed.


Interim dividend
It has been decided to pay an interim dividend of EUR 0.40 (2000: EUR 0.35) per share of EUR 0.25 par value. Shareholders have the choice of receiving this dividend in cash or in (certificates of) shares to be charged to the share premium account. The exchange rate will be determined and announced on August 31, 2001, after close of trading. The interim dividend rate does not provide an indication of the total dividend for 2001. Interim dividend will be payable as of September 3, 2001.













































































































































































































































































































































































Consolidated results
In EUR millions
  First halfyear
2001		 First halfyear
2000		 2001 c/w 2000
%
 
Net sales, continued operations 2,202 1,695 29.9
Raw material costs, etc. 846

 646

 30.8
 
Margin 1,356 1,049 29.3
Other operating proceeds 41

 39

 2.0
  1,397 1,088 28.3
Operating expenses:      
Personnel costs 412 346 32.0
Other costs 567

 429

 32.0
Operating result before amortisation and depreciation (EBITDA) 418 313 33.7
Depreciation 56

 49

 15.9
Operating result before amortisation and depreciation (EBITA) 362 264 36.9
Amortation of goodwill 67

 40

 68.2
Operating result after amortisation of goodwill (EBIT), continued operations 295 224 31.3
Operating profit discontinued operations –

 19

 –
Financial income and expenses (84)

 (54)

 53.9
Profit on ordinary activities before tax 211 189 11.7
Tax on profit on ordinary activities 69

 58

 19.4
Profit on ordinary activities after taxation/ Group profit 142 131 8.2
Minority interests (3)

 (2)

 75.8
Net profit before extraordinary items 139 129 7.3
Extraordinary items after tax 494

 0

  
Net profit after extraordinary items 633

 129

 390.2
Net profit after before amortations of goodwill and extraordinary items 206

 169

 21.7
* For comparative purposes, sales and operating expenses for the first 6 months 2000 of the discontinued operations (NDDG, Zonnatura and some MLM activities) have been excluded on a line by line basis while the related operating result (EBIT) of these activities (EUR 19 million) is shown separately.
 
As % of net sales
EBITDA 19.0 18.5  
EBITA 16.5 15.6  
Net profit before amortisation of goodwill
(‘cash earnings’)		 31.8 10.0  
Net profit after amortisation of goodwill
(‘cash earnings’) and extraordinary items		 9.4 10.0  
Net profit after amortisation of goodwill 28.8 7.6  
Net profit after amortisation of goodwill before extraordinary items 6.3 7.6  
Number of ordinary shares of EUR 0.25
At period-end 162,142,412 156,805,506 3.4
Average 162,142,412 146,379,682 10.8
Fully diluted at period-end 191,458,734 187,718,689 2.0
Fully diluted average 191,458,734 166,347,118 15.1
Fully diluted average for cash earnings before extraordinary items 179,517,919 166,347,118  
Fully diluted average for net profit before extraordinary items 166,042,489 166,347,118  
Per share development (EUR)
Net profit before amortisation of goodwill (“cash earnings”) 4.32 1.16 273.8
Net profit before amortisation of goodwill (“cash earnings”) and extraordinary items 1.27 1.16 9.9
Net profit after amortisation of goodwill 3.91 0.88 342.6
Net profit after amortisation of goodwill before extraordinary items 0.85 0.88 (3.1)
Capital and reserves per share 18.04 11.08 62.9
Gross cash flow per share (adjusted for extraordinary items) 1.61 1.49 8.7
Per share development fully diluted (EUR)
Net profit before amortisation of goodwill (“cash earnings”) 3.82 1.08 253.7
Net profit before amortisation of goodwill (“cash earnings”) and extraordinary items 1.23 1.08 13.9
Net profit after amortisation of goodwill 3.46 0.84 311.9
Net profit after amortisation of goodwill before extraordinary items 0.84 0.84 0















































































































































Consolidated balance sheet

In EUR millions

  30 June 2001 31 December
2000 (after
appropriation of profit)		 30 June 2000
Fixed assets
Intangible fixed assets   4,475   4,133   4,073
Tangible fixed assets   757   767   758
Financial fixed assets
 		   198

   163

   79

  5,430   5,063   4,910
 

Current assets

Stocks   790   806   730
Debtors   1,461   902   704
Deposits, cash at bank and in hand
 		   169

   149

   397

    2,420   1,857   1,831
 

Creditors
 

   2,171

   1,561

   1,155

Net current assets
 		   249

   296

   676

 

Total
 

   5,679

   5,359

   5,586

 

Long-term liabilities

   2,504   3,314   3,670
Provisions   228   150   159
Minority interests   21   20   20
Capital and reserves
 		   2,926

   1,875

   1,737

Total
 		   5,679

   5,359

   5,586





























































Consolidated cash flow statement (unaudited) (EUR millions)
  1st half year 2001   1st half year 2000  
Net profit 633   129  
Adjustments to operational cash flow:
Non-cash extraordinary items (divestments / provisions) (494)   0  
Depreciation 56   52  
Goodwill amortisation 67   40  
Provisions (28)   1  
Long-term liabilities 1   0  
Tax on profit 74   (6)  
Net change in working capital * (52)

   (27)

  
  (376)

   60

  
Net cash flow from operational activities 257   189  
 
Investments:
Proceeds of sale of tangible fixed assets 8   7  
Capital expenditures (51)   (47)  
Long-term investments 6   (12)  
Proceeds of sale Zonnatura 26   –  
Acquisition subsidiaries, minority interests and brands
** (43)

   (1,851)

  
Net cash flow from investment activities
(54)
  
(1,903)
  
Financing:
Issued new shares *** 28   524  
Issued convertible bonds –   693  
Change of lease commitments and loans (short + long) *** (22)   1,592  
Dividend paid in the year under review
(23)   (14)  
Minority interests 2   7  
Exchange rate differences on cash and cash equivalents 20

   (26)

  
Net cash flow from financing activities 5

   2,776

  
Change of net cash position 208   1,062  
Net cash position 1 January (144)

   (856)

  
Net cash position 30 June

64



 
206


 

*   This concerns changes exclusive of dividends, borrowings and swaps
**  Including net cash position of acquired companies
*** Exclusive of conversion








































































Primary segment information
(EUR millions)
  1st half year 2001

   1st half year 2000

  Net sales

 EBITA

 EBITA in % of sales

   Net sales*

 EBITA*

 EBITA in % of sales

Infant Nutrition 487 89 18   448 80 18
Clinical Nutrition & Diets 232 54 23   200 46 23
Consumer Diets & Sports Nutrition
612 81 13   395 39 10
Vitamins & Herbs 795 137 17   573 105 18
Other (including not allocated) 76

 1

 –
 		   79

 (6)

 –
 
Total
2,202

 362

 16
 		   1,695

 264

 16
 






























































































Secondary segment information (EUR millions)
Net sales, continued operations 1st half year 2001

   1st half year 2000*

   2001 c/w 2000%

Northern Europe 307   285   7.8
Central Europe 122   116   4.3
Southern Europe 166   150   10.8
Eastern Europe 103   83   24.3
North America 1,342   905   48.2
Asia, Africa, America 162

   156

   4.1
Total continued 2,202   1,695   29.9
Discontinued operations:
NDDG 228   182   24.9
Zonnatura 5   10    
Other (mainly MLM) –

   10

    
  2,435

   1,897

    
* Restated for discontinued business.

Extraordinary items after tax
This consists of the net book profits on the divestments of NDDG and Zonnatura less provisions for business transformation.

















































Capital and reserves
During the first 6 months of 2001, capital and reserves rose by EUR 1,051 million to EUR 2,926 million. The increase can be specified as follows:
  30 June, 2001
Total

 31 December, 2000
Total

Capital and reserves as at beginning of the year 1,875 955
Conversion/option rights 5 39
Issue shares 27 551
Share issue costs – (20)
Stock dividend 62 47
Change in accounting principles – 15
Net profit for the period 633 162
Exchange rate differences 324 126
Capital and reserves at the end of the period 2,926 1,875
As at 30 June 2001 Guarantee Funds amount to 56.8% of total assets (49.1% at 2000 year-end).






















































Information on fully diluted numbers

The reconciliation between profit/ (loss) for the period before extraordinary items and the weighted average number of shares used in the calculations of the diluted earnings per share are set out below:

  1st half year 2001
(before extraordinary items)
  Net profit before amortisation of goodwill
EUR Mio		 Average number of shares
 Cash earnings per share
EUR		   Net profit after amortisation of goodwill
EUR Mio		 Averagenumber of shares
 Earnings per share
EUR
Profit attributable to shareholders 206 162,142,412 1.27   139 162,142,412 0.85
Potential dilution for options outstanding
1 2,320,000 (0.01)   1 2,320,000 (0.006)
Potential dilution for convertible capital bonds outstanding 14 15,055,507 (0.03)   – 1,580,077 (0.006)
On a diluted basis 221 179,517,919 1.23   140 166,042,489 0.84

The difference in the average number of shares for the calculation of net profit before amortisation of goodwill and before extraordinary items per share and net profit after amortisation of goodwill before extraordinary items per share is caused by the convertible debenture loan 1999 which has no dilutive effect on net profit before extraordinary items per share, due to it’s earnings per share ratio of 1.04.
For profit before amortisation as well as for net profit (both excluding extraordinary items), the Eurobond 2000 has not been included in the calculation due to the fact that it has an anti-dilutive impact. The reconciliation between both cash earnings and net profit for the period after extraordinary items and the weighted average number of shares used in the calculations of the diluted earnings per share is not shown, since in those two situations all convertible loans have a dilutive effect.