Parmalat H1 revenue down but profit grows

Net profit, however, rose by €9.3m ($10.8m) to €39.9m ($46.2m).

With data at constant exchange rates and scope of consolidation and excluding the results of the Venezuelan subsidiary, the reduction in net revenue was -0.9%, with a positive contribution from the Europe, Africa and Oceania regions, but a contraction in North America and Latin America.

EBITDA totaled €146.6m ($169.6m), 20.8% down on the first half of 2017.

With data at constant exchange rates and comparable scope of consolidation and excluding the Venezuelan subsidiary, the EBITDA decrease was equal to 15.1%, with the main declines occurring in Canada and Australia, but Europe reported a gain in profitability.

Europe

The Europe sales region reported net revenue of €570.1m ($659.5m) and EBITDA of €55.8m ($64.6m) in the first half of 2018.

In Italy, the consumption trend was negative in the main markets where Parmalat operates. The local subsidiary succeeded in gaining market share in the milk category, confirming its leadership position in the UHT and pasteurized milk categories, thanks to the contribution of the Zymil brand.

In addition, in the UHT cream category, the local subsidiary strengthened its position as the market leader, thanks mainly to a positive performance by the Chef brand in the light and small-size product categories.

North America

In the first six months of 2018, the region’s net revenue totaled €1.13bn ($1.31bn) and EBITDA of €86m.

The weakening of the US dollar and Canadian dollar versus the euro had a negative impact on net revenue.

In the US, consumption grew steadily in the cheese market during the first six months of 2018. Parmalat said the profitability of the local subsidiary improved slightly, despite a negative performance in the powdered product segment.

In Canada, Parmalat’s profitability contracted, mainly due to seasonal effects that negatively affected stock valorization, a deterioration of the sales mix, owing to the loss of a major customer in the cheese category, a negative performance in the powdered milk segment and higher costs incurred to resolve difficulties in bringing on stream some production facilities and logistics.

Latin America

In the first half of 2018, excluding the effects of hyperinflation in Venezuela, the sales region reported net revenue of €578.4m ($669m) and EBITDA of €14.9m ($17.2m).

In Brazil, within the context of a still ongoing reorganization, the results of the local subsidiary were below expectation, primarily due to protracted strikes in the transportation sector that affected the entire country in May, causing reductions in sales volumes and margins, despite an improvement in overhead costs and the ongoing implementation of a plan to enhance efficiencies and synergies, particularly in the logistics area.

In Mexico, despite a positive trend in the cheese market, the local subsidiary reported a decrease in sales volumes of the more profitable products and faced challenges in the production area.

Africa

In the first six months of 2018, with data at constant exchange rates, the region’s results showed a gain of 3% for net revenue and a reduction of about 33% for EBITDA.

Parmalat said the profitability of the local subsidiary was adversely affected by a deterioration of the sales mix and a protracted strike in June that caused a loss of production.

Oceania

The region reported net revenue of €502.6m ($581m) and EBITDA of €0.3m ($0.35m) in the first half of 2018: With data at constant exchange rates, net revenue showed an increase of 4.4%, with EBITDA decreasing by 97.4% compared with the first half of 2017.

2018 Guidance

The company said the unexpected, recent increases in the cost of raw milk and stresses in the sales area engendered by price adjustments implemented by producing companies justify projections of a contraction compared with the previous year, estimated at about -1% for net revenue and within a range of -3% to 0% for EBITDA.