Wessanen today (15 February) forecast stronger sales growth and improved operating margins for 2017 – but the estimates disappointed analysts and shares in the Netherlands-based food group were down in early trading.
The company, which owns brands including Kallo, Whole Earth and Bjorg, said it expects to grow at a “low double-digit” rate this year, up from the 9% rise in revenue it saw in 2016.
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The group forecast “continued strong growth” of its own brands and said the effect of its acquisitions last year would drive its growth. It expects its top-line expansion to be “partly offset” by lower sales of private-label products and those it distributes.
Wessanen also provided a forecast for its EBITE, or “normalised operating result” margin, which, as a percentage of revenue, was 7.2% in 2016. It expects that metric “to be above” 8% this year.
CEO Christophe Barnouin said: “The market for healthy and sustainable, especially organic, food continues to reflect the trend in consumer behaviour.”
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However, Karel Zoete, an analyst at French finance house Kepler Chevreux, said the forecasts – and Wessanen’s 2016 results – were “a touch light”. Zoete said Wessanen’s decision to focus on own-label would dampen its sales growth. “The margin guidance of at least up 80 basis points year-on-year matches our forecasts, but the projected sales growth is below our level of up 16% year-on-year. The main difference is the magnitude of the impact from phasing out private-label business. We flag that this will mainly impact the H1 results.”
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By GlobalDataWessanen’s 2016 results, issued this morning, included a 38.9% fall in net profit to EUR22.8m (US$24.1m) due to restructuring costs and a more than doubling of its tax bill. EBIT fell 0.9% to EUR34.3m.
The group’s underlying EBIT, or EBITE, increased 18.7% to EUR41.2m. Revenue stood at EUR570m, up 9%. The sales from Wessanen’s own brands, measured on organic basis without including the impact of exchange rates and M&A, rose 8.5%.
Barnouin added: “In 2016, we continued to make good progress on the transformation to a focused, fast growing, sustainable and profitable business.”
Shares in Wessanen had fallen 6.3% to EUR12.94 at 10:59 CET.
