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Success in Fish Feed for Nutreco, Revenue in Q3 Up

29 October 2012

NETHERLANDS - Nutreco has reported an increase in revenue of 13 per cent in the third quarter of 2012, compared to third quarter results from 2011. Success in the fish feed sector offset poorer results in other livestock feeds.

Animal Nutrition division

Revenue for the Animal Nutrition division in the third quarter amounted to &€855 million, an increase of 7.4 per cent compared to Q3 2011. Volumes accounted for -3.2 per cent, while the price effect was 6.1 per cent. The contribution of acquisitions was 1.4 per cent and the exchange rate effect was 3.2 per cent.

Premix and Feed Specialties
The revenue in Premix and Feed Specialties increased by 8.4 per cent to €315 million (Q3 2011: €291 million). Organic volumes in Premix and Feed Specialties were 0.5 per cent lower. The sales prices were on average 1.6 per cent higher, the acquisition effect was 3.7 per cent and related to the purchase of Bellman in Brazil. The exchange rate effect was 3.6 per cent.

The operating result in the third quarter was significantly higher than the third quarter in 2011. The operating margin increased, driven by good performances in growth geographies such as China, Russia and Indonesia, and specific product lines such as Young Animal Feed and Selko Feed Additives. The new premix plant in Russia with a 100,000 tonnes capacity will be opened on schedule in the fourth quarter. At the end of 2012, the production of feed concentrates in the Merksem, Belgium, factory for the Russian market will be stopped. Nutreco intends to close the plant in Belgium.

Animal Nutrition Canada
The revenue in Q3 2012 of Animal Nutrition Canada was €146 million compared to €117 million in Q3 2011, an increase of 24.8 per cent. The increase was mainly caused by 14.7 per cent higher prices, due to higher raw material prices, and partly offset by 1.1 per cent lower volumes. The decline in volume is caused by a slight decline in feed for swine and beef partly compensated by growth in feed for dairy cows. Poultry feed volumes are stable. The exchange rate effect was 11.3 per cent. The operating result was in line with the same period last year.

Compound Feed
The revenue of Compound Feed increased by €9 million to €159 million compared to Q3 2011, an increase of 6.3 per cent. Higher raw materials costs had a price effect of 12.5 per cent. Volumes decreased by 6.3 per cent compared to the same period in 2011. The operating result in Q3 was lower than the same quarter last year due to smaller herd sizes especially in Iberian and white swine. The livestock population in Spain declined slightly compared with last year.

Meat and Other
Revenue from Meat and Other was 1.5 per cent lower at €236 million, due to 5.5 per cent lower volumes and 3.2 per cent higher prices. The exchange rate effect was 0.7 per cent. The operating result in Q3 was significantly below that of Q3 2011 due to considerably higher feed costs and only slightly higher poultry prices. Poultry consumption is still holding up best compared to other protein sources.

Fish Feed

The revenue in Fish Feed was 20.6 per cent higher than in the third quarter of 2011 at €625 million. The total volume effect was an increase of 15.3 per cent. Organic volume growth of 6.3 per cent was mostly due to strong demand for salmon feed in Chile as well as non-salmonid feed. The growth from acquisitions was 9.0 per cent, related to the Shihai fish and shrimp feed business in China. The price effect was -1.1 per cent and the exchange rate effect was 6.3 per cent.

The volume share of fish feed for non-salmonid species is now 35 per cent compared with 26 per cent in the same quarter last year. The operating result in Q3 was significantly higher than the same quarter of 2011. Nutreco has substantially increased its R&D spend mainly to support the growing need for more sustainable feed for sub-tropical fish species and shrimp. The new Chinese research facility will begin the first shrimp feed trials before the end of the year.

Acquisition and divestment

On 8 October, Nutreco announced the acquisition of 75 per cent of the shares in Gisis S.A., the shrimp and fish feed subsidiary of the Expalsa group. Expalsa is the market leader in fish feed production and shrimp and tilapia farming in Ecuador and has strong market positions in Honduras and Peru. The acquisition for approximately €78 million takes Nutreco into the global top three shrimp feed suppliers. Closing of the transaction is subject to regulatory approval from the Ecuadorian competition authority.

After a strategic review, the divestment to the Nuscience Group (a subsidiary of Agrifirm) of the Hungarian business, which is active in compound feed, premix and feed specialties, was announced on 12 October. In 2011, this business had a turnover of €20 million. The divestment will have limited financial impact.

Outlook full year 2012

The following developments are expected for full year 2012:

  • Animal Nutrition: operating result will be above last year (2011: €142 million) with good performances in Premix and Feed Specialties and Compound Feed, an in line operating result for Animal Nutrition Canada and lower operating result in Meat and Other, and
  • Fish Feed: a significantly higher operating result above last year (2011: €119 million).

In an uncertain environment and based on current trading conditions, Nutreco confirms its outlook for the full year and expects EBITA before exceptional items to be approximately €260 million (2011: €232 million).

Agenda 2012

  • Develop higher margin portfolio of nutritional solutions
  • Focus on Premix and Feed Specialties and Fish Feed
  • Continue drive for operational excellence in mature markets
  • Grow in geographies Latin America, Russia, China and Southeast Asia
  • Start implementing the actions from Sustainability Vision 2020

Ambition 2016

Nutreco's 'Ambition 2016 - driving sustainable growth' is to grow and improve profitability by providing innovative and sustainable nutritional solutions for its customers and is expected to result in an EBITA of €400 million by 2016. This will be realised by focusing on a higher margin portfolio of nutritional solutions such as premixes, feed specialties and fish feed, and by expanding into the growth geographies of Latin America, Russia, China and Southeast Asia, which will see the largest increases in both production and consumption of animal protein food products.

ThePigSite News Desk

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