Naturex Sales Impacted by Gloomy Market, Boosted by Vegetable Juices Acquisition
05 Nov 2014 --- Naturex has reported that 2014 third-quarter revenue, as the first two quarters, was impacted by the base effect from exceptional conditions that have benefited in 2013, the green coffee bean extract with slimming effects (Svetol in the United States) and krill extraction sales. It is noted that Krill extraction operations were transferred to the joint venture created with Aker BioMarine with its Houston production plant since September 2014.
Restated to eliminate these non-recurring items, third-quarter sales amounted to €79.3 million, up 9.6% at constant exchange rates. This growth reflects mainly acquisitions with a very good contribution from Vegetable Juices Inc. based on sales of €8.8 million. Adverse currency effects that significantly impacted the last two quarters' sales were sharply reduced in the third quarter as the US dollar strengthened in August and September 2014.
On that basis, at constant exchange rates nine-month sales grew 5% to €230.7 million. On a reported consolidated basis, sales reached €238.4 million, up 0.2% at constant exchange rates (-1.7% at current exchange rates), including the strong four-month contribution from Vegetable Juices Inc. (€11.8 million) and impacted by the €10.9 million base effect differential from Svetol and krill extraction sales.
Food & Beverage (67.3% of restated sales for the period), grew 11.7% at constant exchange rates, driven mainly by sales from Vegetable Juices Inc., consolidated since June 2014, and that contributed to Naturex's F&V (Fruits & Vegetables) range. In addition, the completed reorganisation of the Group's commercial operations and clarification of the offering at the end of 2013 has set the stage for capturing the growth that is still subdued in selected European markets. However, in response to continuing adverse economic conditions and geopolitical tensions in certain regions of the world, the main international players of the food industry have adjusted their inventories, resulting in delays in purchasing.
Nutrition & Health recorded a 7.7% decline in restated sales for Svetol US at constant exchange rates. In the United States, the main contributor to this business, selected nutraceutical customers significantly reduced inventories and revisions to their first half sales forecasts were extended over to the third quarter. Furthermore, a portion of the botanical extract range was adversely affected by increased competition in a difficult market environment.
Personal Care grew 14% at constant exchange rates from a sales base of €4.8 million that is still limited relative to the Group's scale. With an expanded technical range of plant extracts and botanical oils as well as purified active molecules, this activity is positively positioned to address evolving trends in the cosmetics market in favour of more natural products.
Toll Manufacturing, restated to adjust for sales from krill extraction, contributed marginally to revenue in the period based on a level that was virtually on par with 2013. Krill extraction sales are now generated through the Houston plant created under the joint venture with Aker BioMarine.
The Europe/Africa region recorded a decline of 2.5% at constant exchange rates from last year's same period, excluding krill extraction toll manufacturing sales. With the economic environment still sluggish and against the backdrop of the Ukraine-Russia crisis, consumer confidence has experienced difficulty in recovering; all players of the ingredients sector were adversely impacted by inventory adjustments from customers in the food processing and nutraceutical industries.
The Americas region registered sales growth of 13.3% at constant exchange rates (excluding Svetol sales), reflecting mainly the successful integration in the United States of Vegetable Juices Inc. with a substantial four-month contribution to the Food & Beverage activity. Sales to the United States were also adversely impacted by tensions in the nutraceutical market in terms of competition and a phenomenon of destocking by selected customers which persisted in the 2014 third quarter.
The Asia/Pacific region gained 6% at constant exchange rates. Asian countries continue to grow despite marginally lower sales in the 2014 third quarter and the Pacific region (Australia and New Zealand), which accounted for 17% of the sales for this geographic segment excluding the historic business of ingredients distribution in Australia still declining, showed strong growth in the period (+35% at constant exchange rates) around botanical extracts for the nutraceutical market.
Emerging countries account for 18.9% of Group sales, up from 17.9% one year earlier.
"Sales for the first nine months were in line with expectations given the persistently gloomy economic climate, an increased wait-and-see approach by international players and the substantial impact of the exceptionally high comparison base of 2013", commented Thierry Lambert, Chairman of the Board of Directors. "However, sales growth in the 2014 third quarter confirms the attractive positioning of Vegetable Juices Inc. in the Food & Beverage market while the start of its integration highlights the strong potential of this acquisition in terms of commercial and technical synergies within the Group."
Olivier Rigaud, Naturex's Chief Executive Officer who joined the Group on 1st October 2014 added: "In a market with a strong focus on naturalness and "clean label", Naturex's rich product range as well as its significant capacity for sourcing and innovation constitute tremendous assets. In recent weeks, I have been able to observe the expertise and professionalism of the Group's teams. The top challenge going forward will be to ramp up our commercial action in order to fully capitalise on these competitive advantages and generate organic growth of good quality."
