Apetit Plc Half year financial report, January-June 2016

This is a summary of the half year financial report January - June 2016. The complete report, including tables of financial information, is attached to this release and can be downloaded from the company’s website at www.apetitgroup.fi/en.

April–June

• Consolidated net sales amounted to EUR 106.9 (100.2) million
• Operational EBITDA was EUR 0.4 (0.9) million
• Operational EBIT *) was EUR -1.1 (-0.3) million
• Profit for the period came to EUR -0.8 (-0.6) million, and earnings per share amounted to EUR -0.13 (-0.10)

January–June

• Consolidated net sales amounted to EUR 194.5 (191.7) million
• Operational EBITDA was EUR 1.0 (1.1) million
• Operational EBIT *)  was EUR -2.1 (-1.9) million
• Profit for the period came to EUR -3.0 (-2.9) million, and earnings per share amounted to EUR -0.48 (-0.41)

The information has not been audited. The figures in parentheses are the equivalent figures for the same period in 2015, and the comparison period means the corresponding period of the previous year, unless stated otherwise. 

The profit guidance remains unchanged. The Group’s full-year operational EBIT is expected to improve year-on-year (EUR 2.6 million in 2015). Due to the seasonal nature of the Group’s operations, a high proportion of the annual profit is accrued in the second half of the year. 

*) Due to the new amendments to the regulations of the European Securities and Markets Authority (ESMA), Apetit has replaced the key figure “operating profit excluding non‑recurring items” with the key figure “operational EBIT” as of 2016. Operational EBIT does not include restructuring expenses, any significant impairment on goodwill or other balance-sheet items or reversal of impairment, the profit of the associated company Sucros or other extraordinary and material items.

Juha Vanhainen, CEO:

“In April–June the net sales of the Apetit Group grew well in all business areas and was seven per cent higher than in the comparison period. However, operational EBIT declined on the comparison period. I cannot be satisfied with this result, but the good and strong continued improvement of profitability in the Seafood segment is a significant positive aspect within the overall situation. 

The way the operational EBIT developed reveals that the clearest individual factor is the low margins of the Grain Trade in April–June. After a quiet early part of the year, trade volumes picked up. But due to the plentiful supply, sales margins remained thin and the operational EBIT of the Grain Trade segment failed to match the strong performance of the comparison period. In Food Solutions the operating profit was negatively affected by product development investments in the Tuorekset product family and decreased sales volumes in the professional food service sector. 

Measures taken to improve profitability in the Seafood segment are producing results and the Operational EBIT improved substantially on the comparison period. I am especially pleased with the good development of our Finnish operations, which was achieved despite the fact that the price of Norwegian salmon, a key raw material, continued to increase in the review period. The new fish processing plant in Kuopio reached a new level of efficiency when the new automatic filleting line came on stream in May. The efficiency boosting measures implemented earlier in our Norwegian and Swedish operations continued to have a positive impact in the second quarter. 

The implementation of strategic projects has got off to a solid start. In addition to the efficiency boosting programme of the Seafood segment mentioned above, we have also completed the extension of the Kirkkonummi vegetable oil packaging plant, which will both boost our production efficiency and enable us to increase the proportion of more highly processed oilseed-based products in our overall sales. In the Grain Trade we have strengthened our position in the Baltic countries and signed key logistical agreements that will enable us to increase volumes. 

At the beginning of April, after extensive product development, Apetit started to pilot the new “Tuorekset” vegetable concept in Finnish grocery stores. As a result, we can now market a vegetable concept that is unique in terms of its ease-of-use, quality and preservation characteristics, and that answers the needs of modern consumers in a new way. The products will be launched across Finland in mid-August. Based on the pilot stage we expect the product to attract considerable interest among traders and consumers and make a key contribution to the growth story of vegetable-based diets. 

In accordance with our strategy, we have launched a digitalisation-based innovation portfolio to develop completely new dining and food-related services for the producer-to-consumer value chain. Our “Digital food services” project gained a positive financing decision from Tekes in April, and we have got off to a speedy start that will lead to the building of a partner network in the autumn.” 

GROUP-LEVEL KEY FIGURES 

SEGMENT COMPARISON 

Since the beginning of 2016, the new reporting business segments have been Food Solutions, Oilseed Products, Grain Trade and Seafood.

• The Food Solutions business comprises the frozen foods group and fresh products group, as well as service sales.
• The Oilseed Products business includes the processing and sale of vegetable oils and expeller meals.
• The Grain Trade business comprises Finnish and international trade in grains, oilseeds and feed raw-materials.
• The Seafood business comprises the operations of the fish products group in Finland, Sweden and Norway.

The associated company Sucros (20% holding) has been reported after operating profit in the income statement as of the beginning of 2016 and Group Administration costs have been allocated equally between the segments. 

OUTLOOK FOR 2016 

In Finland, the market situation in the retail sector is expected to remain challenging. The growth outlook of the Finnish economy is weak. Prices on the international grain market are anticipated to remain at a relatively low level due to ample grain stores, at least during the first part of the new harvest season. 

The Group’s full-year operational EBIT is expected to improve year-on-year (2015: EUR 2.6 million). Due to the seasonal nature of the Group’s operations, a high proportion of the annual profit is accrued in the second half of the year. The improvement of the Seafood segment’s profitability supports the improvement of the Group’s operational EBIT in the comparison period. 

Due to the significant effect of international grain market price fluctuations on the entire Group’s net sales, Apetit will not issue any estimates of the expected full-year net sales.

Further information

Juha Vanhainen, CEO, tel. +358 (0)10 402 00
Eero Kinnunen, CFO, tel. +358 (0)10 402 4025

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Invitation to a briefing

A briefing (in Finnish) for analysts and media representatives will be held today at 10.00 a.m. in Hotel Scandic Simonkenttä (address: Simonkatu 9, Helsinki). In the briefing Apetit Plc’s CEO Juha Vanhainen presents the January - June results of Apetit Plc and gives information about other current issues. Apetit Plc’s CFO Eero Kinnunen will also be present in the briefing.

The presentation material will be available on the company’s website at http://www.apetitgroup.fi/en/ after the event. 

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