New focus hits Ebro sales, boosts profits
as it continued to streamline its business around three core
sectors - dairy products, sugar and rice.
Efforts by Ebro Puleva, Spain's largest food company, to focus its business on the core markets of rice, sugar and dairy products have led to lower sales by higher profits in the first half of 2003.
Sales for the six months were down 9.3 per cent to €973.6 million as a result of the sale of various non-core operations such as the Chilean retail group Proterra or those in which it did not have a controlling stake, such as diversified Spanish group Jesus Navarro.
But the tighter focus on its core business meant that net profits for the six months were 19 per cent higher than in the previous year to €63.7 million, while the proceeds from the various disposals helped the company reduce its debts by 37.9 per cent to €382.5 million.
Net profits from the three core business units was ahead 22 per cent during the half. Azucarera Ebro, the sugar arm, had an excellent first half, with increases in both sales and operating profits helped by a good quality sugar harvest and improvements related to the unit's ongoing cost-cutting measures.
Puleva Foods, the dairy arm, also improved, driven by added value branded products, in particular functional milk products. The unit also stopped producing own label milk for the retail trade - a low margin business - which helped lift EBITDA by some 10 per cent over the half.
Herba, the rice unit, had a tough first half, mainly due to high raw material costs. The decline of the dollar and subsequent strengthening of the euro meant that it was cheaper for US rice producers to sell their products in Europe, eating into Herba's market share. The situation should improve in the second half, however, as the dollar strengthens again.
In April, Ebro Puleva bought Kraft Foods' rice business in Germany, Austria and Denmark, expanding its European market leadership as a result.
