Ebro Foods, the Spanish rice-to-pasta group, has warned of an expected decline in full-year profits.
Higher advertising spending, the sale of rice brand Nomen and foreign exchange dented Ebro’s nine-month earnings and prompted the revised forecast.
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Ebro said that its EBITDA in the first nine months of the year fell 6% to EUR195m after a 17% increase in marketing investment and the sale of the Nomen brand, which contributed EUR5m to the year-ago result. Net profit was down almost 10%, dropping to EUR99.5m
Sales dipped 1.3% to EUR1.5m, due to the sale of Nomen and “other smaller brands” – a condition imposed by Spain’s competition authority as a condition of the acquisition of the former Deoleo rice business.
Looking to the full year, Ebro said it anticipates a 10% drop in net profit and a 6.6% decline in EBITDA on flat sales.
Kepler analyst Inigo Egusquiza was upbeat on the group’s strategic development, highlighting “good potential for growing organically/through acquisitions” and “increasing exposure to meal solutions”.
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By GlobalDataHowever, Egusquiza cut his full-year estimates by 5% following the third-quarter result. “The 2013 cut is mainly explained by a lower contribution from rice business (Basmatic rice price increases, Texas droughts and Morocco).”
