Strong progression in turnover for 2007 : + 19.1 %

> Turnover
> In a context of rising raw materials prices
> Nutrition - Compound feed
> Premix Specialties
> Health
> Outlook

Turnover

Turnover in €M     ( IFRS standards)	2007	2006	% change
1st quarter	178.0	167.7	+6.2 %
2nd quarter	172.4	148.2	+16.8 %
3rd quarter	185.1	154.7	+19.6 %
4th quarter	223.2	166.4	+34.2 %
Total	758.7	637.0	+19.1 %

In a context of rising raw materials prices

The strong increase in raw materials prices which was seen over the first half-year and which accelerated over the third quarter, showed some respite at the end of the year. The main reasons for this context of high prices result from the imbalance between supply and demand on a worldwide scale: a traditional and random cause, unfavorable weather conditions and new structural causes which weigh on the market such as the rising importance of bio-fuels and, more especially, the increasing spending power of emerging countries. These phenomena have translated into a vertiginous increase in prices and « stock to use » ratios which have not ceased to deteriorate for 5 years.
Given that raw materials account for some 70% of the sales price, these increases are naturally to be found in the increase in turnover, even if they can only be partially and progressively integrated into the sales prices.  Our increased utilisation of the futures markets to cover our positions and our research into substitute raw materials are factors which lessen the impacts and smooth out the consequences in the profit margins.

Nutrition - Compound feed

Rebound for Nutrition France activity over the 4th quarter
Concerning the “Nutrition France“ activity, turnover for the 4th quarter 2007 amounted to €186.9M, an increase of 32.2% over the same period for 2006. This shows the price effect, of course, but also a pick-up in volumes of almost 5% over the period.
The price increases levied by the agro-food industry have managed to calm down the production entities, with the exception of pigs, and also to allow the animal feed industry to apply significant price increases over the period, thus allowing the margins to recover.
Over the 2007 period, turnover for this Division was €475,8 M, an increase of 16.8%. Following several years of decline, volumes registered a slight increase, in a home market which has picked up notably in poultry after the 2006 period which was marred by the avian flu virus, and in dairy cows, showing a growing worldwide demand for dairy products.
A very good period for International Nutrition
The “International Nutrition” Division registered an increase in turnover of 44.9% for the 4th quarter: it amounted to €44.9M and €43.2M on a like-for-like basis. The integration of the two acquisitions made over the period, Zoofort in Brazil and Bernaqua in Belgium, made a contribution of €2.8M.
At the year-end, turnover amounted to €152.4M, which is a 25% improvement over the same period for 2006. Over and above the impact of prices linked to raw materials rates, this Division registered a 14% growth in volumes, with some 600Kt sold.

Premix Specialties

Twofold tensions on this market
In 2007 this activity was doubly penalized: upstream, in line with vegetable raw materials, the prices of vitamins, essential ingredients in the composition of premixes, soared, thus reducing margins. Downstream, sales for the “on-farm mixers“ activity saw severe competition from compound feed which was favored by the stockbreeders to reduce the cost of raw materials.
Leader in France
Turnover for the 4th quarter for the Premix Specialties France Division amounted to €10.8M and €40.2M on a cumulated basis, a progression of 72% over the period and 9% on a like-for-like basis.
This positive development arises essentially from the purchase of Nutreco’s business at the beginning of the year which makes us the market leader for Premix and specialised products and services to the industrial producers and on-farm mixers.
Sustained growth internationally
Over the 4th quarter, turnover from International activities amounted to €14.2M, a progression of 42% and a cumulated total of €50.7M, a progression of 32% for the 2007 period, and 11% on a like-for-like basis.
The Russian subsidiary, Rossovit which was acquired in January, with its contribution of €8.9M and the good performance of the Export teams constitute the main factors of this growth.
The new factory in Qingdao in China, an investment of €4.5M, was inaugurated early January 2008, according to schedule. Commercial development on this rapidly growing market is promising.

Health

Animal health : an efficient response to a tense context
The market has been affected by a strong and sudden increase in raw materials (antibiotics, wheat, lactose).
This particular market situation has led our teams to make changes to the product-mix, reinforcing the development of specialized products and exports, to the detriment of traditional ranges with weaker price elasticity. Turnover for the 4th quarter amounts to €5.6M and €25.3M for 2007, an increase of 2.9%.

Outlook

The price of raw materials leveled off during the 4th quarter following several months of frantic rises : it is still on a upward trend and highly volatile. Apart from the pig sector, the repercussions of these price rises levied by the farming industry on finished goods allowed the “food chain values” to loosen up and the animal nutrition industry to progressively reestablish its levels of profit margins.
Concerning volumes, the French market registered an increase of over 3% during 2007, resulting in a pick-up in the post avian–flu poultry sector and the strong demand for dairy products worldwide:  it remains tense and structurally positioned downwards. On the other hand, development opportunities are confirmed in emerging markets, as we can see from the good performances given by Feed and Premix at an international level.
In spite of a period which has been chaotic due to the worldwide context of rising raw material prices which have squeezed our margins, the Group has proved its capacity to resist and to meet its objective of a net annual result of at least last year’s level.
These contrasting market contexts, combined with the lasting and structural nature of the high raw material prices situation reinforces our group in its profound beliefs and strategic choices, based on :

• Innovation, offering the stockbreeders optimal nutritional and economical solutions.
• Internationalization through organic or external growth, to capture growth where the markets are making strong progress.
• Optimization of the French base to capitalize on a market demanding excellence.

EVIALIS  WILL COMMUNICATE ITS ANNUAL RESULTS ON 25 MARCH 2008