ORIOR, the Swiss leader for fresh convenience food and premium meat products, held its ground during the first half-year of 2012 despite the market headwinds. Although revenue growth was undermined by pricing pressure on the company's products, the EBITDA margin was stable thanks to value-enhancing initiatives and tight cost control. Looking ahead, various activities and the new product launches in the pipeline bolster our confidence in a successful second half-year.
The markets where ORIOR Group is active were still influenced by the strong Swiss franc during the first half of 2012. Sales in the food retail sector were dampened by widespread pricing pressure and tourist shopping in border areas but countertrends towards local and regional products as well as fresh foods were also observed and the discount channel displayed positive growth. The restaurant and food-service channel came under intense pressure during the first half, especially in the tourist cantons of Ticino and Graubünden, two important markets for ORIOR. Against this backdrop, ORIOR Group achieved satisfying results in the first half of 2012: Net revenues were down only slightly by 1.3% from CHF 244.1 million to CHF 240.9 million. This decline was mainly attributable to lower average selling prices during the period. Low input prices for meat and packaging materials were a positive factor. Various value-enhancing initiatives kept the gross profit margin at a good level: EBITDA of CHF 25.5 million corresponded to an EBITDA margin of 10.6%, compared to 10.9% in the comparable previous-year period. Profit for the period amounted to CHF 12.9 million versus CHF 13.6 million in the first half of 2011.
Margins held despite lower selling prices
The group's premium meat processing segment Refinement reported revenues of CHF 148.3 million, down from CHF 152.5 million in the previous-year period mainly because of persisting low pork prices, which led to retail price markdowns and, consequently, lower revenues. Refinement nevertheless managed to raise its EBITDA margin to 9.5% from 9.3% in the previous-year period. The Convenience segment, specialized in making fresh convenience food, reported net revenues of CHF 91.2 million for the first half-year of 2012, compared to CHF 92.1 million in the year-ago period. Although higher revenues were achieved in several product areas such as seafood, this did not offset the effect of retailers' generally scaled-back sales promotion activities. Input prices remained stable during the period under review. Despite the slight decline in revenues, the Convenience segment was able to hold the EBITDA margin steady at nearly 15%. After reporting strong growth in the previous year, the Corporate, Export and Logistics segment consolidated its gains during the period under review. Revenues were roughly unchanged year-on-year. Sales volumes of Bündnerfleisch in neighboring countries were stable while vegetarian products enjoyed growing popularity. Market studies and due diligence reviews conducted during the course of the Möfag acquisition resulted in non-recurring expenses, which is why this segment's EBITDA was slightly negative.
Fast pace of innovation maintained
ORIOR maintained its rapid pace of product innovation during the period under review and introduced scores of new products tailored to the needs of consumers in the retail segment. Of special mention is Rapelli's Hambolino Burger, a high-quality, low-fat burger made of ham with no artificial colors or gluten that is the first to directly address children and their parents as a target group. Ultra-fresh meals from Le Patron with a generous portion of vegetables, all freshly prepared when ordered, were another innovative new offering. The promising post-launch sales figures for both new products will now have to be confirmed in the second half-year.
Möfag a important bolt-on acquisition
ORIOR Group acquired Mösli Fleischwaren AG (Möfag) in the first half-year of 2012. Möfag is a highly regarded producer of “Fürstenländer” specialties such as Appenzeller Mostbröckli, ham and other meat products. A family-run business with about 60 employees, Möfag is firmly anchored in eastern Switzerland and sells its products through gastronomy as well as retail channels. Möfag was integrated into the Refinement segment as an autonomous unit. CEO Remo Hansen: “Möfag is another jewel in ORIOR Group's crown. Its product portfolio, brand appeal, strong position with discounters and high levels of innovation and efficiency are ideal for enhancing our own portfolio. I am especially pleased that Möfag's previous owner Urs Mösli will continue to manage the company with his team as an integral element of the Refinement segment.”
Business to remain stable
ORIOR Group expects slightly higher revenues and a stable margin in the second half-year of 2012. Its fast pace of innovation will be maintained and many new products will be launched in the Refinement and Convenience segments. ORIOR will continue to pursue its value-enhancing initiatives to defend its cost leadership and several processes that can be further optimized have been identified. ORIOR Group is thus creating the conditions that will ensure its healthy profitability in both the medium- and long-term future.