UK fresh prepared foods and produce company Geest has said its full-year earnings will be within its expectations, despite the difficult trading conditions recently reported by retailers.
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The company, which is facing a possible takeover by Iceland’s Bakkavor, said group earnings before interest, tax and amortisation (EBITA) for the year to 1 January 2005 will be within the board’s existing range of expectations. Group sales are expected to show like-for-like growth of some 5%. Geest said total reported group sales are likely to show a decline of 2% due to the change in accounting treatment of most of its produce sales from half-way through the year.
Sales from the company’s UK fresh prepared foods business are expected to have grown by around 4% (like-for-like), although Geest said it saw a lower than expected rate of sales growth in the second half due to worsening general retail conditions in the autumn.
Sales of fresh prepared foods in continental Europe are expected to have grown by around 5%, despite some sales price pressure in all of the company’s market sectors.
Geest said it expects produce sales to have grown by about 12% (on the basis of a consistent accounting treatment), reflecting growth from the creation of International Produce Limited in July 2004.
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By GlobalData“Trading conditions throughout 2004 were difficult as competition between retailers focused on price to an unprecedented level and pressure on suppliers’ margins remained intense,” Geest said.
Looking ahead, the company said it expects high levels of retail price competition to continue, although it reassured investors that there was continuing growth in consumer demand for fresh prepared foods. Geest also said it has won new business with existing UK retail customers which will benefit sales levels through the first half of 2005 at an annualised value of £30m (US$56.1m).
