Corbion Reports Sales Decrease, Expects Growth for Food Business in 2017
06 Mar 2017 --- Corbion reported sales of € 911.3 million in 2016, a decrease of 0.8%. Organic sales growth was -1.2%. EBITDA excluding one-off items grew by 13.2% in 2016. In Q4 2016 sales were € 226.1 million, a decrease of 1.9%. Q4 2016 EBITDA excluding one-off items increased by 6.3%. The company proposes to distribute a regular dividend of € 0.56 per share, an additional cash dividend of € 0.44 per share, and a new share buyback of €25 million.
"In 2016 we continued to make good progress in executing our strategy and we are well on track to deliver on our 2015-2018 targets. In the past year we have made strategic choices involving our customer and product portfolios. These choices resulted in a significant margin improvement, but at the same time had an adverse, albeit temporary, impact on our top-line growth in the year. For 2017, we are confident top-line growth will return to our guidance range. A notable highlight in the second half of the year was the announcement of the PLA joint venture together with Total, a market leader with technical and marketing expertise and a leading position in polymers," commented Tjerk de Ruiter, CEO.
The Food business segment showed an organic sales growth of -1.9% in 2016. As part of Corbion's strategy the company started to improve the profitability of their portfolio in the second quarter. This had a positive impact on the price/mix of the portfolio, but a negative effect on volumes sold. The EBITDA margin of the business segment improved (up from 18.8% to 21.1%) in 2016 compared to last year mainly due to lower input costs, program “Streamline,” and the improved product mix.
In Bakery, sales decreased in 2016 in a stable US bread market. With the closure of Corbion's Kansas plant in the second quarter (as part of plant consolidation), we decreased the number of SKUs and moved smaller customers to an indirect delivery model, which negatively impacted our volumes. Sales were also impacted due to a negative comparison with 2015: mid-2015 we were able to accommodate a surge in demand for higher priced egg-containing products due to an outbreak of avian flu in the US. A reversal of this effect from the second quarter 2016 onwards put additional pressure on both volumes and price/mix, particularly in the Q3 comparables, and less pronounced in the Q4 comparables. In the fourth quarter, the impact of the portfolio optimization was still visible.
On balance, Meat sales decreased slightly in 2016. Sales in Asia and Latin America continued to grow at a brisk pace as demand for our preservation solutions grew. However, customer consolidation in the US put pressure on volumes and prices for more commoditized parts of the market. In the US, high-end solutions, such as natural vinegar-based products, continued to show healthy growth. In the fourth quarter, sales in Meat grew slightly.
In other markets (Beverages, Confectionery, Dairy), sales increased slightly in both full year and Q4 2016. In 2016 Corbion commenced operations in their new Dutch powder facility, which enables them to expand their Confectionery portfolio.
Key financial highlights FY 2016
Net sales organic growth was -1.2%; volume growth was -1.2%
EBITDA excluding one-off items was € 170.1 million, an organic increase of 13.8%
EBITDA margin excluding one-off items was 18.7%, up from 16.4%
"Streamline" contributed € 20 million to EBITDA (2015: € 15 million)
One-off items at EBITDA level of € -3.2 million in 2016, mostly in connection with the closure of our Kansas powder blending plant, partly offset by the sale of the Breddo-Likwifier activities
Operating result was € 126.9 million, an organic increase of 17.5%
Free cash flow was € 72.1 million (2015: € 55.2 million)
Net debt/EBITDA at year-end was 0.6x (2015: 0.4x)
Our € 50 million share-buyback program was finalized on 28 October 2016.
