Naturex “solid” H1 results in line with expectations, says CEO

14 Sep 2017 --- Reporting first-half year results, Naturex CEO and director Olivier Rigaud says the plant-based natural ingredients specialist had a “solid” first half with “no surprises,” with improvements in profitability and working capital, as well as gaining share into emerging markets. Naturex says that it is performing in line with the roadmap already established as part of its 2020 targets and will remain focused on this. 

Analysis of revenue and results
Revenue for the 2017 first half amounted to €207.5 million (US$247 million), largely stable over the two-quarters, compared to the high base for the same period in 2016. 

Like-for-like (constant currency and structure), revenue contracted marginally by 1.9 percent. During this period, Naturex says it accelerated efforts to reduce the number of SKUs which impacted in part the level of sales of its two business platforms, My Natural Food (€107.1 million: US$127 million) and My Natural SelfCare (€71.5 million: US$85 million). 

At the geographical level, the deployment of the company’s regional organization strengthened its presence in emerging countries (revenue of €14.6 million: US$17.3 million for Latin America and €31.6 million: US$37.6 million for the Asia-Pacific region) and consolidated its strategic position in the nutraceutical market in North America (revenue of €91.4 million: US$108 million). 

The EMEA region (revenue of €69.8 million: US$83 million) was in contrast adversely affected by an unfavorable comparison base resulting from a decrease in the number of SKUs and the transfer of invoicing for a specialty nutraceutical product to the Asia-Pacific region, masking the positive effects of the commercial approach implemented in strategic categories.

At the same time, progress was made in optimizing the company’s product mix through its four strategic categories, while other activities, non-strategic in nature, represented €28.9 million (US$34.3 million) in revenue.

“The 2017 first half marked the end of the simplification phase we initiated two years ago. The road ahead for achieving Bright2020 objectives is now clearly mapped out on the basis of sounder and stronger foundations,” says Naturex CEO and director Olivier Rigaud. 

“At the financial level, continuing efforts to contain overhead expenses and effectively manage working capital, contributed to growth in recurring operational EBITDA. Finally, we have negotiated new financing capacities to prepare for future developments.”

The gross margin on Cost of Goods Sold (COGS) amounted to €59.4 million (US$70.6 million), up 2.8 percent compared to the 2016 first half after taking into account the cost of goods sold of €148,0 million (US$176 million) which integrates all costs linked to production, including labor costs.

The gross margin as a percentage of sales on that basis represented 28.7 percent compared to 27.8 percent in the 2016 first half or an increase of 90 basis points, largely in response to measures adopted to simplify the product portfolio and optimize industrial processes.

Expansion
Yesterday FoodIngredientsFirst reported how Naturex has informed its shareholders of strategic advances in the fruit and vegetable market in the US. On the organic growth front, Naturex is seeking to create synergies between the North and Latin American markets and the company has reached an agreement with the minority shareholders of Chile Botanics on the purchase of 49 percent of their stake. 

“To support organic growth, we have invested in drying technology facilities for Vegetable Juices Inc. and bought out the interests of Chile Botanics' minority shareholders to create business and sourcing synergies.”

“This mix of external and organic growth is fully in line with our strategy for accelerating the development of our platform of natural fruit and vegetable-based ingredients. The group has moreover also invested in its 'natural preservatives' platform to support growing market demand in particular for rosemary, by increasing production capacity at the plant in Morocco and expanding the natural preservatives range to antimicrobials.”

“In the coming months, we will continue to focus on energizing our business pipeline by accelerating the development of our strategic categories and by applying the same approach to the 'natural colors' and 'phytoactives' categories.”

“For the 2017 second half, we will remain fully concentrated on executing our roadmap for a gradual return to organic growth, with a focus on innovation and open innovation.”