Oct 25, 2013 ... brands Dr Schär and Krisprolls performed well, whereas Gayelord Hauser
modestly declined in a stable dietetic market. The roll-out of Clipper ...
press
release Q3 2013 trading update |
Strong revenue growth at Grocery, offset by ABC decline Most core brands and categories are growing
'Wessanen 2015' fully on track
Press release
25 October 2013
Q3 2013 highlights Autonomous revenue decline of (2.9)% is mixture of strong growth at Grocery and decline at ABC Most core brands and categories show growth, in particular Bjorg, Zonnatura and Clipper and categories such as sweets in between, dairy alternatives and bread replacers IZICO making good progress in executing its plans Operating result helped by an exceptional gain of €7.0 million 'Wessanen 2015' on track to deliver €15 million in annualised savings as of 2014
Consolidated key figures Q3 2013 Q3 2013
Q3 2012 ²
9mon 2013
9mon 2012 ²
Revenue
171.2
175.4
531.0
547.0
Autonomous revenue development 1
(2.9)%
in € million, unless stated otherwise
Normalised operating result (EBITE)
(3.7)%
2.6
7.5
16.7
16.6
1.5%
4.3%
3.1%
3.0%
Operating result (EBIT)
9.3
6.7
21.0
15.5
Net result, attributable to equity holders
3.7
3.9
7.6
8.8
Net debt
72.5
57.3
Earnings per share (in €)
0.05
0.05
0.10
0.12
75,736
75,691
75,718
75,690
as % of revenue
Average nr. of outstanding shares (x 1,000) 1)
Including adjustments for currency effects and acquisitions/divestments; qualifying as a continuing operation end of 2012
2)
Figures restated for effect of IAS19R and ABC
CEO statement Piet Hein Merckens (CEO) commented: "Although European unemployment has continued to grow and consumer confidence is still rather low, we have witnessed early signs of recovery, reflected in growth of world trade and lower inflation rates. At the same time, I am encouraged by the positive developments for healthy, sustainable food such as organic, natural, free-from and fair trade products. The vast majority of our core brands and categories have benefited from this on-going trend at consumers to live healthier and be more conscious about any impact on our planet. We have increased our A&P investments behind our core brands such as Bjorg, Bonneterre, Clipper, Whole Earth and Zonnatura, resulting in strong media campaigns in the quarter. I am very pleased to conclude that all parts of our transformational program Wessanen 2015 have been largely completed. We are fully on track to deliver annualised cost savings of €15 million per annum as of 2014. We have made strong progress in becoming a more focused and integrated company, offering healthier food for healthier people on a healthier planet. Our third quarter results offer a mixed picture. The operating result at Grocery and HFS increased, while the turn-around at IZICO is very promising. At ABC, we have spent ample time on reducing costs, de-risking the business and establishing a solid plan in order to be profitable again in 2014.
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Press release
25 October 2013
I am encouraged by the progress made in Europe year-to-date, while all of us are focused to bring our businesses to a good end in 2013 and being well-positioned for a good start in 2014.”
Financial summary Q3 2013 Third quarter revenue amounted to €171.2 million. The depreciation of the British pound and US dollar depressed revenue by 1.6%, whereas the first-time addition of French-based Alter Eco added 2.1%. Autonomous growth was (2.9)% with price/mix contributing 0.8% and volume (3.7)%. Strong growth at Grocery was more than offset by ABC’s weak performance. When taking the closure of the Deurne plant (and subsequent exit of part of our product range) earlier in the year out of equation, IZICO would have grown revenue as well. Gross margin percentage increased at Grocery and IZICO, while ABC showed a marked decline. Warehousing and transportation expenses decreased as well as general and administrative costs as a result of various cost reductions related to 'Wessanen 2015'. Marketing investments were substantially higher. These include a TV commercial and promotions for Bjorg in France, large media spend in the UK for Clipper and Kallø and a Zonnatura TV commercial and Clipper activation in the Netherlands. Normalised EBIT showed a significant decrease to €2.6 million (Q3 2012: €7.5 million) as a result of the losses incurred at ABC in the quarter. When including exceptional income and costs, the operating result increased to €9.3 million (Q3 2012: €6.7 million). Exceptional items mainly include a gain on settlement of a legal claim. 1
Net financing costs amounted to €(0.7) million versus restated costs of €(0.6) million last year. Income tax expenses were €(4.9) million versus €(2.2) million last year. This includes an addition to the provision for uncertain tax positions of €2.3 million. Net result amounted to €3.7 million (Q3 2012: €3.9 million). Earnings per share were €0.05 (Q3 2012: €0.05). Net debt decreased to €72.5 million (end of June 2013: €74.6 million). The Net Debt/EBITDAE ratio increased to 2.2x at the end of September (30 June 2013: 2.0x).
Financial guidance FY 2013/14 Revenue As part of our transformational programme ‘Wessanen 2015’,we have implemented a number of strategic initiatives to improve profitability. As a consequence, revenue at our Grocery, HFS and IZICO operations will be impacted negatively in the fourth quarter 2013 and first half 2014. At our Grocery operations, this negative effect is estimated to be €2.5 million in Q4 2013 and an additional €2-3 million in H1 2014. These initiatives include the downsizing of our German and Italian operations, the exit from a UK private label contract and the delisting of Dutch Biorganic. For our HFS operations, the negative impact will be €2.5 million in Q4 2013 and an additional €3-4 million in H1 2014. These initiatives include cutting the tail projects in both France and the Netherlands. The majority of fruits & vegetables distribution at Bonneterre has ceased in the second quarter, while the remainder was transferred to Biodistrifrais. At IZICO, the impact will be €3.5 million in Q4 2013 and another €4 million in Q1 2014. The majority relates to the closing of our Deurne plant at the end of Q1 2013 and the subsequent exit from our Halal range and a reduced focus on private label meat-filled snacks. Additionally, portfolio pruning has resulted in the delisting of numerous slow rotating products.
1
Figure restated for effect of IAS19R
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Press release
25 October 2013
EBIT(E)
In 2013, non-allocated expenses (including corporate expenses) are expected to be €10 million; In Q4, in relation to Wessanen 2015, exceptional costs of less than €(1) million are still expected; At ABC, we expect to show a full year 2013 operational loss (EBITE) of US$8-10 million; For 2014, we expect ABC to be profitable again.
Financial and cash flow items (in 2013)
Net financing costs expected to be €2-2.5 million; 2 Effective tax rate expected to be around 45% ; Capital expenditures expected to be €6-7 million; Depreciation and amortisation expected to be €13-14 million.
Grocery Q3 2013
Q3 2012
% change
9mon 2013
9mon 2012
Revenue
72.7
65.8
10.5%
216.7
203.9
Autonomous revenue development
6.4%
in € million, unless stated otherwise
2.8%
Revenue increased to €72.7 million. Autonomous growth was 6.4% driven by volume increases of 5.3% and a price/mix effect of 1.1%. The acquisition of Alter Eco added 5.7%, while currencies had an adverse effect of 1.7%. Several strategic actions such as partly exiting German and Italian grocery, exiting a UK private label contract and delisting Biorganic had a 3% negative impact. Operating result was about in line with last year. Gross profit and margins increased, while costs have been reduced and marketing spending showed a clear step-up. France reported strong growth driven by promotions and a new TV campaign for Bjorg. Also third party brands Dr Schär and Krisprolls performed well, whereas Gayelord Hauser modestly declined in a stable dietetic market. The roll-out of Clipper is progressing as planned resulting in wider distribution.
The integration of Alter Eco is developing according to our plans including a merging of the sales force, integrating sourcing, expanding distribution and fine-tuning the product portfolio. In the Benelux, Zonnatura continues to do well, benefiting from good growth at juices, sweets in between and bread replacers. A second TV commercial “What happened to our food?” was aired during September, starring green tea. It was accompanied by sampling actions, in-store promotions and displays. Clipper has become available at Albert Heijn (four varieties) as well as at health food stores (eight varieties).
2
Effective tax rate excludes the recognition of provisions for uncertain tax positions
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Press release
25 October 2013
In the UK, we have been doing well in our various categories such as dairy alternatives, bread replacers and teas. Initial consumer responses on the rebranding and packaging redesign of Kallo into Kallø have been favourable.
Health Food Stores in € million, unless stated otherwise
Revenue Autonomous revenue development
Q3 2013
Q3 2012
% change
9mon 2013
9mon 2012
48.9
48.0
1.9%
155.8
153.9
(1.4)%
0.1%
Autonomous revenue growth was (1.4)% as a result of 1.9% lower volumes and price/mix effect of 0.5%. In addition, revenue is positively impacted by 3.3% following an increase of intersegment revenues. Reported growth was negatively impacted by pre-ordering of German customers in the st second quarter in relation to the SAP go-live at 1 of July, which resulted in an estimated (1.5)% impact. An additional negative effect of 3% (€1.3) million was caused by the discontinuation of the fruit and vegetables distribution at Bonneterre. Profitability improved compared to last year as lower gross profits, largely related to lower German volumes, were offset by a lower cost base. Our Benelux business continues to improve its performance. In the Netherlands, Natudis increased its sales to both Natuurwinkel formula stores and independent stores. Our Belgian operations and fresh distributor Kroon also grew sales. The new concept ‘van de natuur’ (‘of nature’) has been introduced at the first Natuurwinkels and was well received by consumers as well as customers. In France, the benefits of the refocus and restructuring are becoming increasingly visible. The wholesale activities of Bonneterre (excluding discontinued fruit and vegetables) and Biodistrifrais both increased. Both Bonneterre and Evernat brand grew, driven by increased distribution at chains and promotional support for especially Bonneterre during the quarter. In Germany, Allos sales were lower as a result of pre-ordering in the second quarter. Tartex continued to expand its position in the general health food stores (‘Naturkost’). Clipper has been introduced with 10 tea flavours, receiving very positive feedback from consumers and shop owners and generally positive first sell-in figures.
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Press release
25 October 2013
IZICO in € million, unless stated otherwise
Revenue Autonomous revenue development
Q3 2013
Q3 2012
% change
9mon 2013
9mon 2012
24.7
26.6
(7.2)%
77.9
83.5
(7.2)%
(6.7%)
Revenue decreased to €24.7 million. Autonomous revenue was (7.2)%, consisting of (11.0)% (planned) volume decline and a price/mix effect of 3.8%. The closure of the Deurne plant and cutting the tail initiatives had an adverse impact of €3 million on volumes. Branded sales have been growing in both the Netherlands and Belgium in out-of-home as well as in retail. Also private label sales continue to grow, while export was lower. All restructuring and reorganising related to ‘Wessanen 2015’ has been finalised in the summer. A new ERP system has successfully been implemented, while good progress is being made with outsourcing part of ICT. The operating result clearly improved as a consequence of an improved gross margin, the closure of the Deurne plant and good cost containment. Marketing spending was in line with last year. As of mid-October, Beckers has expanded its distribution at Albert Heijn. To further activate our brands, we have launched out-of-home consumer actions such as ‘Win 1 of in total 4 Vespa’s’ by Bicky and a scratch card action to win free tickets by Beckers.
ABC in € million, unless stated otherwise
Revenue Autonomous revenue development
Q3 2013
Q3 2012
% change
9mon 2013
9mon 2012
28.4
36.9
(23.0)%
88.8
111.8
(18.2)%
(18.6)%
Revenue declined to €28.4 million (US$37.9 million). Autonomous growth was (18.2)% as a result of 16.9% lower volumes and a price/mix effect of (1.3)%. A weakening of the US dollar contributed another (4.6)% to reported revenue growth. The main cause for the decline was the disappointing development of frozen pouches during the 2013 summer season. The market decline for frozen pouches remained at over 20% both in volume and value. Daily’s held its market share at 44%. Both non-alcohol and single serve showed small revenue declines, whereas our fruit drinks brand Little Hug continue to show healthy double-digit growth. As a consequence of lower volumes, ABC has been loss making in the third quarter and it is expected to be loss making in the seasonally weak fourth quarter as well.
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Press release
25 October 2013
To become profitable again in 2014, numerous actions have been initiated, including a headcount reduction and immediate cost reductions. Furthermore, additional plans are under development for addressing procurement, supply chain, manufacturing and marketing to lower the cost base substantially for 2014.
Non-allocated and eliminations (including corporate expenses) Inter-segment revenue between Grocery and HFS amounted to €3.5 million (Q3 2012: €1.9 million).
Important dates 2014 21 February 28 February 16 April
Q4 / full year results Publication Annual Report (online) Annual Shareholders Meeting
25 April 25 July 24 October
Q1 trading update Q2 results / semi-annual report Q3 trading update
Analyst & investor meeting At 10h00 CET, an analyst, investor & media call will be hosted by Ronald Merckx (CFO) and Carl Hoyer (VP Corporate Communications & Investor Relations). The dial-in number is +31 20 794 8504 (toll free 0800 265 8526). The press release and presentation will be available for download at www.wessanen.com.
Press, investor and analyst enquiries Carl Hoyer (VP Corporate Communications & Investor Relations) Phone +31 20 3122 140 / +316 123 556 58 Twitter @RoyalWessanen
Company profile Royal Wessanen is a leading company in the European organic food market. In 2012, Wessanen generated revenue of €711 million, employing 2,064 on average. Operating mainly in France, the Benelux, UK, Germany and Italy, we manage and develop our brands and products in the grocery and health food channels. Our vision is to make our organic brands most desired in Europe. Our brands, such as Bjorg, Whole Earth, Zonnatura, Kallø, Clipper, Bonneterre, Ekoland, Allos, de Rit and Tartex, are pioneering brands in the organic food markets. Next to our leading position in organic food businesses, we also produce and market branded (Beckers, Bicky) and private label frozen snack products in the Benelux (IZICO) and fruit drinks (Little Hug) and cocktail mixers (Daily’s) in the US (ABC).
Note on forward-looking statements This press release includes forward looking statements. Other than reported financial results and historical information, all statements included in this press release, including, without limitation, those regarding our financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These forward-looking statements are based on our current expectations and projections about future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Wessanen's ability to control or estimate precisely, such as future market conditions, the behaviour of other market participants and the actions of governmental regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release and are subject to change without notice. Other than as required by applicable law or the applicable rules of any exchange on which our securities may be traded, we have no intention or obligation to update forward-looking statements.
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Press release
25 October 2013
Condensed consolidated income statement In € millions, unless stated otherwise Q3 2013
Q3 2012
9 months 2013
9 months 2012
(unaudited)
Restated1 (unaudited)
1
Restated
(unaudited) 171.2
(unaudited) 175.4
7.0
-
Revenue
531.0
Other income
7.0
9.3 (0.7) 8.6 (4.9)
6.7 (0.6) 6.1 (2.2)
Operating result Net financing costs Profit/(loss) before income tax Income tax expense
3.7
3.9
Profit/(loss) for the period
547.0 -
21.0 (1.7) 19.3 (11.7)
15.5 (1.9) 13.6 (5.1)
7.6
8.5
Attributable to: 3.7
3.9
Equity holders of Wessanen
7.6
-
-
Non-controlling interests
-
3.7
3.9
Profit/(loss) for the period
7.6
8.5
0.10
0.12
75,718
75,690
0.05
0.05
Earnings per share attributable to equity holders of Wessanen (in EUR) Basic
75,736
75,691
Average number of shares (in thousands) Basic
0.7492 1.1702
0.7934 1.2628
Average USD exchange rate (Euro per USD) Average GBP exchange rate (Euro per GBP)
0.7585 1.1712
8.8 (0.3)
0.7758 1.2312
Condensed consolidated statement of financial position In € millions, unless stated otherwise 30 September 2013
31 December 2012
31 December 2012
(unaudited)
Restated1 (unaudited)
Reported (audited)
Total non-current assets Total current assets Total assets
145.4 223.5 368.9
154.5 183.4 337.9
154.5 183.4 337.9
Total Total Total Total
115.5 100.4 153.0 253.4
110.8 81.0 146.1 227.1
101.6 90.2 146.1 236.3
368.9
337.9
337.9
0.7405 1.1961
0.7579 1.2253
0.7579 1.2253
equity non-current liabilities current liabilities liabilities
Total equity and liabilities End of period USD exchange rate (Euro per USD) End of period GBP exchange rate (Euro per GBP) 1)
Restated for revised IAS19 (employee benefits)
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