Evialis' operating profit remains steady amid harsh trading conditions - 23/09
Evialis reported turnover of €347.8 million for first-half 2004, compared with €332 million for first-half 2003. At constant exchange rates, turnover was €351 million, up 5.7%. The year-on-year difference can be partly explained by a sharp rise in commodity prices and the fact that business volumes in France have levelled off.
Sharp margin squeez due to commodity prices
Difficult conditions in the industrial pork and poultry sectors were made worse by intensifying competition. In addition, following huge rises in commodity markets in late 2003, world prices remained high in the first half of this year. To cope with these turbulent conditions, the group pursued a policy of maintaining its market share in France. And, out of consideration for its breeder-customers, who have been hard-hit by a whole series of crises, it decided to pass through only some of the rise in commodity prices. This led to a sharp squeeze on margins, particularly on pork and poultry.
Marked improvement at the operating level in France
Evialis saw a remarkable upturn in performance at the operating level in France, as a result of two main factors. First, the problems caused by industrial and logistical restructuring, which had impacted first-half 2003, were addressed and solved. Second, efforts to mobilise the workforce and organise operations into nine regional profit centres made it possible to boost efficiency, maintain market shares and contain operating costs.
Improvement in Brazil and Poland
Internationally, the recovery plans launched in 2003 in Brazil and Poland have begun to deliver results, which must now be consolidated. Moreover, the group achieved healthy performances in emerging markets such as South Africa, Indonesia and Vietnam. In particular, it inaugurated a new aquaculture facility just outside Ho Chi Minh City.
Operating profit holds steady
Despite the turbulent environment, Evialis overcame a sharp contraction in margins and held operating profit steady at €2.9 million in first-half 2004, compared with €3.1 million in H1 2003. This was attributable to stable business volumes and stronger operating results in France, combined with the upturn in Brazil and Poland.
The group reported a net loss of €1.8 million for first-half 2004 compared with a profit of €1.4 million for H1 2003, when the result was swelled by €3 million of exceptional income. It should also be noted that the tax charge for H1 2004 was €2 million higher than for the same period last year.