Wessanen has reported a rise in net profits in its first quarter, despite only achieving flat sales growth in the period.
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The multinational food corporation said revenues in the quarter reached EUR408m(US$524m), in line with the same period last year. Currency effects contributed EUR20m positively.
“Sales picked up during the quarter after a slow start at the beginning of the year, fuelled by innovations and brand development,” the company said in a statement.
EBITAE increased by 23% to EUR11.3m. Net profit rose from EUR3.1m to EUR5.1m. The main drivers were improved EBITAE and the strong decrease in exceptional expenses, the statement added.
Ad Veenhof, Wessanen CEO, said: “The results we present today are in line with our outlook for the year. Margins for all our activities in Europe and North America were equivalent to or better than the same period last year.”
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By GlobalDataThe North American distribution activities reported EBITAE of around break-even, compared to EUR1.2m negative in the same period last year.
“In North America we saw positive autonomous growth with our top ten customers. As said in our outlook, however, the effect of the discontinued distribution contracts caused, on balance, sales to decrease. Our businesses in Europe saw a somewhat slow start of the year, although sales picked up during the period and are expected to continue to grow in Q2. This sales increase will be the result of recently introduced innovations and more effective promotional campaigns boosting sales of our own brands,” Veenhof said.
“The strong improvement in our net profit is also partly due to a very limited amount of exceptional items in Q1-06, demonstrating that restructurings are almost completed. As a result, Wessanen is now lean and agile, and we are ready and able to strengthen our unique position in the competitive food marketplace.”
Looking forward, the company said that for the full year, sales of its North American distribution division are expected to show modest growth. In the first half of the year growth is expected to be negative, as previously terminated contracts have not yet been fully offset by either organic growth or new business. Based on these growth expectations, EBITAE as a percentage of sales at the North American distribution operations is expected to increase to 1.5 to 2% in 2006. Due to limited exceptional expenses, EBIT is expected to arrive at around 1.5% in 2006.
