Spanish food processing group Ebro Foods saw its net turnover rise 2.3% during the first half of 2018, it has announced.
The group earned a net profit of €76.3 million, bringing the net turnover to €1.28 billion, which is down 17.1% when compared to the first half of 2017.
The gross operating profit stood at €151.4 million, down 16.6% year on year. Additionally, the group’s net debt grew by €215 million to €732.2 million year on year.
Diminishing Dollar, Staffing Shortages, And Supply Challenges
The group’s earnings were affected by a number of factors, including rising costs in conducting business in North America, a lower dollar exchange rate, and major investments the group made in expanding their business.
The price of jasmine rice from Thailand went up, affecting business in Europe and particularly Riviana, a subsidiary of Ebro based in Texas. The establishment of the Bangkok division in collaboration with the Thai government has also hampered sourcing as the division is still in the works of being established.
Ebro Foods also highlighted impacts such as a staff shortage in its Freeport, Texas plant and an extraordinary rise in costs relating to haulers and fuel prices in the US. As a result of all this, the group has hedged raw material sourcing of pasta in both the US and Europe for the rest of the year.
New Investments
The group has seen high industrial costs related to its new line of microwaveable products in the US and Spain. Other recent investments Ebro has made include acquiring Italian pasta manufacturer Bertagni for €145 million, and establishing a new headquarters for its Panzani brand in France, with an investment of €14 million.
The group also cited heavy investment in organic growth and, in the face of possible adverse situations, a considerable increase in working capital towards sourcing raw material, as factors affecting its net turnover.
Growth Despite Challenges
The rice division, however, did see an unprecedented 13% growth in gross operating profit. Similarly, the volume of sales itself was not affected and continue to grow, particularly in the company's American brands.
Its Panzani business in France increased its market share in all the segments in which it operates. As well, the group’s Garofalo brand has consolidated its position in the competitive Italian market after acquiring a majority stake in Bertagni earlier this year, and has launched its first fresh pasta ranges.
Finally, after Ebro implemented measures in Riviana to boost value, the brand is beginning to improve its market share, especially in core pasta segments.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Padideh Aghanoury. Click subscribe to sign up to ESM: European Supermarket Magazine.
