ORIOR Group in the first half of 2013: Sales growth, margin pressure, positive outlook
All ORIOR segments grow: net revenues up 3.1% to CHF 248.4 million. EBITDA margin dips to 9.3% due to high raw material prices. Pace of innovation accelerates. Positive outlook for second half with further revenue growth and slightly better margins.
ORIOR, the Swiss leader for fresh convenience food and premium meat products, increased its sales volumes in the first half of 2013, with revenues rising 3.1% to CHF 248.4 million. EBITDA amounted to CHF 23.1 million, which corresponds to an EBITDA margin of 9.3%, compared to 10.5% in the first half of 2012. Profit for the period amounted to CHF 11.2 million (1H 2012: CHF 12.6 million). The decline in net profit is attributable to higher raw material prices that could not be immediately passed through to customers. Cost management efforts could not offset the impact of more expensive raw materials. However, ORIOR Group's margins have been back at their usual levels since June 2013. Together with the top-line growth and the various new product launches, the outlook for the second half of the year is positive.
All three ORIOR segments – the Refinement segment with its competence centres Rapelli, Spiess and Möfag; the Convenience segment with Fredag, Pastinella and Le Patron; and the Corporate, Export and Logistics segment – reported higher revenues in the first half of 2013, and thus contributed to the Group’s overall growth. ORIOR’s overall sales volumes rose, driven by its good market position, the adjustments to prices made in May/June 2013 and the success of the latest product launches. Productivity has also improved thanks to investments made in the previous year and to various optimisation and training programs.
The Refinement segment increased its revenues from CHF 148.3 million to CHF 150.1 million. Growth was driven by Möfag and Rapelli. Spiess fell short of expectations but the outlook for the second half of the year is positive. The EBITDA margin, which had risen to 9.5% in the prior-year period, receded to 7.5% as a result of high meat prices, particularly for pork.
Sales in the Convenience segment rose from CHF 91.2 million to CHF 94.3 million in the first six months of the year. The corresponding growth rate of 3.4% was better than the market growth rate. This segment’s growth was driven by its vegetarian specialities, the extension of its ultra-fresh product line and its food service offering for restaurant/catering customers. Despite an increase in raw material prices, the EBITDA margin was held at 14.7%.
The Corporate, Export and Logistics segment reported revenues of CHF 17.2 million for the period under review, up from CHF 16.3 million in the first half of the previous year. Exports of Bündnerfleisch remained stable, while vegetarian products exported to foreign markets showed another significant increase.
Investments made in innovation and brands
The pace of new product launches picked up throughout the Group during the first half of 2013. ORIOR unveiled a world's first that took nearly three years to develop: the very first fresh pasta containing neither gluten nor lactose. This new line of products will start appearing on retail shelves in the fall of 2013. ORIOR is thus establishing itself in another attractive niche with an innovative product line. Further highlights are “Eat Meat Chips” – a dried meat snack high in protein and low in fat – and the new seasonal specialities and ready-to-eat cold dishes that have been added to the ultra-fresh product line.
Besides innovation, ORIOR invested in its brands during the period under review. The “Albert Spiess of Switzerland” brand, under which ORIOR sells Bündnerfleisch across Europe, will soon be used in the Swiss market, too. New packaging for “Albert Spiess of Switzerland” was created to highlight the tradition, authenticity and quality of these Bündner specialities. Nature Gourmet, ORIOR’s successful brand for vegetarian specialities, has also been adorned with a new logo and a new packaging design since the summer of 2013. A new advertising campaign was launched in April 2013 to further strengthen the profile and appeal of the Ticinella brand. It features print ads and television commercials filmed in authentic locations that capture the typical Ticino spirit.
ORIOR Group expects revenues to trend higher in the second half of 2013. Margins should show a slight improvement. Various value-enhancing initiatives will enter a crucial phase in the autumn: at Le Patron, the “Move 100” project for optimising internal processes will be completed; the renovation of Rapelli's order picking facility will be in full swing; and various SAP systems will be rolled out. ORIOR Group is thus creating conditions that will ensure its healthy profitability in the medium to long term.