Taxes hit Parmalat net profit

Taxes hit Parmalat net profit

Parmalat, the Italian dairy group controlled by Lactalis, has raised its forecasts for annual underlying sales and EBITDA.

The improved guidance came after sales and EBITDA grew in the first nine months of the year. However, Parmalat booked lower net earnings over the same period.

The company lifted its full-year guidance, with net revenue and EBITDA - at constant exchange rates and scope of consolidation and excluding the effect of hyperinflation in Venezuela - now expected to grow by more than 5% compared to previous expectations of a 3% increase.

In the first nine months, Parmalat revealed sales increased 2.5% to EUR3.97bn (US$4.96bn). Stripping out the negative impact of currency and other factors impacting comparability, sales were up 9.6% in the period. Operations in Latin America, Africa and North America provided a "particularly strong contribution", Parmalat said.

EBITDA was up 2.4% to EUR299.1m. Stripping out foreign exchange, consolidation and hyperinflation, EBITDA gained 13% in the period.

However, higher taxes dampened net profit, which fell to EUR143.1m, down from the EUR159.6m booked in the first nine months of 2013.

Kepler Cheuvreux analyst Daniele Ridolfi said the new sales and EBITDA guidance was "cautious" as it implies negative fourth-quarter trends. This is "not likely" considering "Parmalat will benefit from the increasing list price, the stabilisation of raw materials and efficiencies", he wrote in a note to investors.

Even though Ridolfi was more upbeat concerning the group's operating performance, his EPS expectations for the full-year remain "broadly unchanged" because "the higher EBITDA will be offset by higher tax rate".

Click here to view the full announcement from the company.