"Contribuing to the restructuring of the sector" - 17/03
Evialis is holding up relatively well in exceptionally tough conditions
The variation in turnover reflects a contrast in performance between the first and second halves of the year. In market conditions that were exceptionally difficult, particularly at the start of 2003, Evialis reported a pick-up in volumes in France at the end of the year.
Contrasting levels of performance un france and on international markets
In the first half of the year in France, business volumes were strongly impacted by the scale of the crisis affecting the three main sectors of animal production: poultry, pigs and cattle. Further, the group encountered difficulties in the implementation of its industrial restructuring programme, a situation made worse by market pressures.
In the second half-year, the market was influenced by two key factors: a drought that affected farm productivity while stimulating demand for cattle feed, and an unprecedented increase in the cost of raw materials, which affected end-of-year margins. Moreover, the fall in volumes slowed in the second half of the year, owing to the strenuous efforts made by group personnel. At the end of the year, tonnages were equivalent to those of end 2002.
In international markets, the group reported contrasting levels of performance against a backdrop that was also marked by the worldwide rise in raw materials prices. In Brazil, Evialis repositioned its range, and reorganised its sales teams and distribution networks. In Poland, the group continued its redeployment programme, targeting the pig and cattle markets as well as high added-value segments.
Evialis is achieving good results on a number of markets, including Indonesia, South Africa, Spain and Vietnam.
Results hit by a fall in volumes
Gross profit totalled €206.1 million in 2003, compared with €214.8 million in 2002. A narrowing was observed at the end of the year due to the difficulty of passing on the steep increase in raw materials prices to selling prices.
Despite the savings generated by the restructuring plan in France, operating profit slid from €19.6 million in 2002 to €11.4 million in 2003. This primarily reflects market pressures and the impact of a downturn in volumes in a sector where fixed costs are high.
Despite unsettled external and internal conditions, the group reported net profit (excluding minorities) of €3.7 million.
Dividend
In the light of these results, the board of directors will recommend a dividend of €0.90 (or €1.35 including the avoir fiscal tax credit) to the Annual General Meeting of 27 May. This dividend corresponds to a gross yield of 4% on the basis of a share price of €34.
Outlook
In terms of outlook, the first half of 2004 is marked by considerable uncertainty in many areas including the consequences of avian flu, trends in pork prices, rising raw materials prices and the difficulties of passing on the increase.
In international markets, Evialis is seeking to rationalise its business / country portfolio. The priority is to achieve a recovery in Brazil and Poland. In the longer term, the group will need to target its resources and concentrate on a smaller number of countries. In 2004, Evialis will be focusing efforts on developing the most promising markets, such as Brazil, South Africa and Vietnam.
Evialis, marking a key contribution to restructuring in France
"These results are clearly not satisfactory in absolute terms. The climate is still bad," says Alain Meulnart, Chairman and Managing Director of Evialis since March 2003. "Even so, the figures are reassuring, in view of the sheer scale of the crisis affecting the French animal feed market. The reorganisational measures taken in recent months are now clearly starting to bring results, backed up by a strong commitment from personnel. As a result, we have been able to remain in profit despite the highly unfavourable backdrop. The situation therefore appears to be stabilising. This will allow us to concentrate on the key aspect of the problem: rationalising our industrial production base in France, against the new competitive situation created by the CAP. This challenge concerns all the players in the non-regulated market, who must work together to sharpen their competitive edge. Evialis, the only non-integrated player, naturally has a key role to play in this reorganisation, by virtue of its size and its presence on the main markets in France. And this is what we intend to do in the coming months, by working with all those concerned.”