Zurich, 31 August 2010
Best interim results in the company's history –
Balance sheet significantly stronger after the stock-market listing in April of this year – Confident outlook
ORIOR Group, catering primarily to retailers and food service professionals and successfully listed on the Swiss stock market since April of this year, generated record results in the first half of the 2010 fiscal year. Despite lower raw material prices and corresponding reductions in selling prices, the company managed to increase first-half sales by 1.6 percent y-o-y to a new record high of CHF 246.7 million. The positive trend in private consumption contributed to an even greater 4.4 percent increase in sales volumes. Despite growing pressure on prices, earnings growth outpaced the increase in sales and volumes: Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 5.8 percent to CHF 26.1 million, resulting in an EBITDA margin of 10.6 percent. EBIT increased by 6.7 percent to CHF 19.4 million and profit for the period rose by 3 percent to CHF 10.3 million despite non-recurring costs associated with the stock-market listing. The pleasing course of business during the first half of the year and the inflow of capital from going public had a positive impact on ORIOR's balance sheet. Net debt was reduced from CHF 121.1 million at the end of December 2009 to CHF 88.6 million while shareholders' equity nearly tripled to CHF 153.9 million, resulting in a solid equity ratio of 40.7 percent.
"In the pursuit of our strategic goals we succeeded in growing earnings even faster than sales and volumes despite a highly competitive environment and have also achieved the best first-half results in the history of ORIOR," CEO Rolf U. Sutter said about the company's performance in first half of the year. "This development is also a confirmation of our strategy to focus our three segments of Convenience, Refinement and Corporate, Export and Logistics on those areas where we are particularly strong and where we can take a leading position." The good operating performance in the first half was also driven by the Group-wide value-creation initiatives that have been taken during the past two years, initiatives designed in particular to optimize operating processes and thereby increase efficiency. These efficiency improvements have enabled us to handle higher volumes while keeping the number of employees virtually unchanged at about 1,250. Reported profit for the period, up 3 percent to CHF 10.3 million, was negatively impacted by the significantly higher financing costs prior to the IPO and the approximately CHF 1 million in costs associated with the early retirement of a credit arrangement. Excluding these extraordinary items, bottom-line profit would have shown an increase of more than 10 percent. The significantly lower financing costs under the terms of a new credit facility will have a positive impact on the future net financial result.
Stable developments at all three segments
The strategically important Convenience segment delivered another strong across-the-board performance. Sales were up in both the retail and, in particular, food service channels. Our innovative and high quality fresh convenience products give food service patrons a greater variety of delicious choices without increasing the workload of restaurant and other catering enterprises and their acceptance is steadily growing as a result. Sales in the Convenience segment rose by 3 percent compared to the prior-year period to CHF 99.8 million and EBITDA advanced 19.3 percent to CHF 14.8 million. The strong earnings power of the Convenience segment was once again evident: Convenience contributed 38.7 percent of Group sales but 56.7 percent of total EBITDA. The Refinement segment confirmed its function as a major pillar of the Group's operations. With sales of CHF 145.6 million (-0.9 percent compared to the prior-year period), the record-high level achieved in the previous year was almost held despite the highly competitive environment. Intensive marketing spending and higher energy costs led to a CHF 0.4 million decrease in EBITDA to CHF 13.2 million. The Corporate, Export and Logistics segment displayed continued high growth rates, driven primarily by our steady sales growth in foreign markets. The volume of products sold surged by 52.6 percent, while sales rose by 24.3 percent. EBITDA remained in negative territory at CHF -1.9 million (prior-year period -1.4 million) mainly because of the stiff competition, the weakness of the euro and, especially, because of IPO-related extraordinary costs.
Balance sheet strengthened significantly
The proceeds raised during the course of the IPO allowed the company to halve its net debt to CHF 88.6 million at mid-year. Total liabilities were reduced from CHF 322.9 million (Dec. 31, 2009) to CHF 223.9 million, while shareholders' equity nearly tripled to CHF 153.9 million, resulting in a high equity ratio of 40.7 percent. This significant strengthening of the balance sheet is also reflected in the net debt-to-EBITDA ratio, which now stands at 1.65. There was a slight increase in current assets from CHF 139.3 million to CHF 143.9 million, mainly attributable to higher accounts receivable due to modifications in the payment terms negotiated with several major customers. This also had an impact on the cash flow from operating activities, which declined to CHF 9.4 million at mid-year from CHF 13.5 million at the end of 2009.
"Barring any unforeseen developments we expect that the traditionally somewhat stronger latter half of the year will be even better than the first half," says CEO Rolf Sutter in reference to the company's outlook. Consequently, sales and earnings for the full 2010 fiscal year should be slightly higher than in the previous year, putting ORIOR on track to achieve record results again. Rolf Sutter's forecast is based on the good course of business in July and August and the company's well filled innovation pipeline. "This will enable us to continue to act as a trendsetter in both the Convenience and Refinement segments and to introduce more new products or product variations," remarks Rolf U. Sutter. New launches will have a positive impact on top-line sales as will the successful food service concepts for restaurant and café operators that have been rolled out. The ongoing value creation initiatives set the stage for sustainable cost-cuts and, together with significantly lower financing costs, should have a continued positive impact on costs going forward. Although raw material prices are generally expected to trend slightly higher, ORIOR expects its margins to at least remain within the previous range.
Expansion of Executive Board
The Board of Directors of ORIOR AG has appointed Mr. Stefan Jost (47) Head of the Refinement segment and member of ORIOR's Executive Board. This is a newly created position. Stefan Jost will report directly to the Group's CEO. After an extensive international career with Procter & Gamble, Stefan Jost joined Lindt & Sprüngli in 2004 and served as the CEO of Lindt & Sprüngli Italy. He will assume his new position on November 1, 2010.