Chocolate and cocoa products maker Natra has insisted it expects margins from its key business-to-consumer arm to improve during 2011 after rising input costs hit profits during the first quarter of the year.
The company makes private-label chocolate for retailers and products for food manufacturers, while also receiving income from its investment in ingredients maker Natraceutical.
However, just under two-thirds of Natra’s turnover is generated by its business-to-consumer unit, which serves retail customers mainly in Europe.
Natra swung to a first-quarter profit thanks to transactions linked to its stake in ingredients maker Naturex.
Nevertheless, EBITDA from its business-to-consumer arm fell 32.7% amid the high price of cocoa and the lag in increasing prices with the company’s retail customers.
“[The] usual mismatch between any change in the price of raw materials and the review of contracts with clients has circumstantially impacted the …. margins in the first quarter, which decreased from 7.9% to 5.2%,” Natra explained.
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By GlobalDataHowever, Natra forecast that margins from the business-to-consumer arm would improve during the year.
“With the ongoing contract negotiations, the company expects a recovery in margins throughout the year, as has been the case in the past. Margins in this division are estimated to stand around 8% in the exercise,” Natra said.
A 3.5% increase in sales from the division – combined with a 6.1% increase in revenues from Natra’s B2B arm – helped push up total turnover by 0.4% to EUR87.4m.
EBITDA and margins from Natra’s B2B division improved amid high demand for cocoa powder within the food industry. EBITDA from the company’s B2B arm sky-rocketed in the first quarter, up from EUR170,000 in the first quarter of 2010 to EUR1.5m this year.
Amid its results, Natra reported net income of EUR2.7m for the first three months of 2011, compared to a net loss of EUR380,000 last year.