Naturex Revenues Rise 13.8%, Nutrition & Health Sales Disappoint
04 Feb 2015 --- Naturex has reported that annual revenue for 2014 reached €327.4 million, up 2% (+2.2% at constant exchange rates), with mixed performances from our main businesses and geographic markets, reflecting continuing adverse global economic conditions.
Fourth-quarter sales reached €89 million, achieving strong growth of 13.8% (+8.5% at constant exchange rates), bolstered by a strong dollar and a robust contribution from Food & Beverage in the United States, in particular from Vegetable Juices Inc. (€9.3 million). This performance reduced the negative impact of the comparison base from krill toll manufacturing and Svetol sales for the period (-€5 million).
The company reported positive effects from structuration in the Food & Beverage's organization. Food & Beverage had sales of €213.2 million, with strong growth of 15.9% at constant exchange rates. This performance confirms the positive effects of measures taken in 2013, mainly in the United States (regional deployment of sales offices) and very strong gains by Vegetable Juices Inc. consolidated for only 7 months, particularly in the 2014 fourth quarter, and despite pronounced seasonal effects in the beverage segment.
At constant structure and exchange rates, this business grew 4.5% for the full year, with a significant acceleration in the fourth quarter of +9.1%.
These positive trends are expected to continue over the coming months in the United States, driven by synergies from their broad product range of ingredients and multiple advantages (nutrition, vitamins, nutrients, etc.) from the range of vegetable juices and concentrates offered by Vegetable Juices Inc., as well as through the development of our application know-how that will strengthen our regional positions with major customers. Furthermore, recent investments in emerging countries (the Quillaja extract facility in Chile and the fruit and vegetable powders plant in India) should drive gains in these high-growth local markets.
Sales for Nutrition & Health of €97.5 million were particularly disappointing, declining 13.9% at constant exchange rates, mainly in the United States. The impact of the negative comparison base from Svetol US sales in relation to 2013 (-€7.2 million) and the slowdown in the traditional nutraceutical market (dietary supplements in capsule and tablet form) impacted sales of this business.
However, growing consumer interest in products combining nutritional and health benefits has bolstered the nutraceutical market in favour of greater convergence and innovations in the functional food segment. With our expertise in plant extracts and natural ingredients with organoleptic, texturing and nutritional properties (fruits and vegetables in dry or liquid form), Naturex is well-positioned to take advantage of this trend.
A plan to reposition Naturex's offering is already underway. Specifically, it is focusing on creating value-added nutraceutical solutions enhanced by an offering of products with substantiated claims (effects scientifically proven by clinical studies) and concepts combining food processing and health concepts according to differentiating formats (beverages, soups, gums, shots, etc.) offering significant synergies with the Food & Beverage product range.
Better adapted to a less fragmented and growing market, this positioning will provide renewed commercial momentum to our commercial positions. Personal Care had sales of €6.9 million with good growth (+18.1% at constant exchange rates) from an energized offering and Naturex's sourcing and purification of extracts know-how. A more targeted commercial approach and the development of innovative concepts within the dedicated SpringLab platform based in Avignon will contribute to further development of this business over the medium and long-term.
Revenue in the Europe/Africa region declined 7.5% at constant exchange rates from the same period in 2013. Restated to eliminate the technical effect associated with the transfer of krill extraction operations to the joint venture, sales for this region declined 1.9% at constant exchange rates. The activity of our customers including mainly leading names of the food processing industry has been significantly impacted by a continuing unfavourable economic environment in Europe that were exacerbated by the Ukraine/Russian crisis.
The Americas registered sales growth of 10.8% at constant exchange rates. In the United States, excluding negative impacts from Svetol sales and the weakness in the traditional nutraceutical market, sales registered double-digit organic growth in the Food & Beverage segment, capitalizing on the regional redeployment of its sales force and the very good contribution from Vegetable Juices Inc. (US) over only seven months of consolidation (€20.8 million).
Emerging countries contributed significantly to sales in the period (+11.8%) with an acceleration in the fourth quarter (+30.4%), representing 19.4% of Group sales, up from 17.7% one year earlier (20.6% in the 2014 fourth-quarter). This ramp up in Latin America and Asia confirms Naturex's determination to benefit from growth drivers in these countries. Investments made seek to strengthen our local presence (plants, application labs, sales offices), explore new market niches and support our customers in their developments in these high potential markets both for our Food & Beverage and Nutrition & Health businesses.
"Annual sales for 2014 were both disappointing overall though included very mixed performances for our main two businesses and by region", commented Naturex's Chairman of the Board, Thierry Lambert. "Growth of the Food & Beverage business, excluding the excellent contribution from Vegetable Juices Inc., is very encouraging, particularly in the fourth quarter; Its performance confirms the validity and success of measures undertaken in 2013 both with our product portfolio and our commercial organization, despite a continuing difficult economic environment. Conversely, the sudden reversal in growth trends in the traditional nutraceutical market in the United States, the major contributor to the Nutrition & Health business, had a very adverse impact. In response, the repositioning of our offering currently in progress in this segment will lead to a renewed growth momentum. Significant inroads in emerging markets in the year confirm the relevance of the investments made and the development potential of these new growth drivers."
Olivier Rigaud, Naturex's Chief Executive Officer, added: "After completing the organizational changes to the Group this year, Naturex now has solid foundations for pursuing the next phases of development with reinforced operational governance and a more functional and experienced commercial organization. The Group has furthermore effectively invested to improve its customer approach through an enhanced and better valued product range and by strengthening its regional and local positions.”
“These measures have started to pay off, with the first effects on Food & Beverage and selected regions already visible. We must now build on this momentum and extend it to all our markets throughout the world.”
The "Conquest & Cash" 2015 action plan represents a necessary first step for returning to sustainable and quality organic growth. Priorities set to achieve this goal are commercial conquest, industrial efficiency, control over operating expenses and a significant reduction in WCR.
“Bringing to bear my experience in this area, I will support Naturex's teams who are now already engaged in successfully achieving this shared and unifying Group objective. The 2020 strategic plan that will be announced in June 2015 will propose a longer-term vision for Naturex's development, its market positions, objectives and ambitions for the future."
