Spanish food company Ebro Foods has posted a 15.9% drop in net profit to €43.4 million in the first quarter of 2018, due to a hike in commodity prices in its rice division.
Sales were down 0.9% to €628.7 million as a result of a lower dollar exchange rate. At constant exchange rates, sales revenue would have grown by 3.9%.
The retailer’s EBITDA, or gross operating profit, dropped 15.9% to €79.1 million.
Net debt rose to €610.1 million, practically €93 million more than at year-end, owing to the acquisition of the fresh pasta company Bertagni and the ramp-up of working capital in both divisions so that they can stock up on raw material in anticipation of possible adverse situations.
The company acquired a 70% stake in the pasta firm for €130 million at the beginning of the year.
Rice Price
In its rice division, Ebro said that the hike in prices for raw aromatic rice from Asia and long grain rice from America are set to ease off later on in the year as the company is in the process of confirming the new prices.
The section was also hampered by a personnel shortage at some of Ebro’s plants as well as higher logistics costs due to tighter regulation and higher fuel prices.
The turnover of its rice section was €346.1 million and its EBITDA stood at €44.8 million.
“In a market with moderate growth, our brands achieved a positive global performance,” the company said. “They have maintained their growth through innovation, especially our microwave pots, healthy and organic products and all our value-added product ranges.”
Pasta Promises
Ebro’s pasta division outperformed the market in value terms, the company added. Here, the raw material situation is stable and prices are not expected to rise in the near future.
Panzani performed well in France, increasing its market share in all the segments in which it operates. Garofalo maintained satisfactory expansion in countries such as France, Spain and the USA.
In the US, its Riviana brand has begun increasing its market shares through heavy investment in advertising to highlight its brand attributes, along with a strong commitment to health categories, especially gluten free.
The division's turnover was €296.2 million and its EBITDA stood at €34.8 million.
The acquisition of Bertagni and the upturn of Ebro’s North America pasta business will turn around a difficult start to 2018, the company said.
“As we have seen, the group has begun the year grappling with complex temporary circumstances, which will revert as the year goes on,” it said in a statement. “But we have also achieved very positive landmarks, which reflect the excellent health of our businesses.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: European Supermarket Magazine.
