Nov. 14 - Parmalat S.p.A. announces that its Board of Directors, meeting today under the chairmanship of Raffaele Picella, approved the Quarterly Report at September 30, 2007, which not only confirms that the improvement in operating performance is continuing, but also shows a significant increase in the Group's liquidity.
In the first nine months of 2007, net sales revenues totaled 2,797.4 million euros, or 143.3 million euros more (+5.4%) than the 2,654.1 million euros reported at September 30, 2006. Restated to eliminate the impact of the appreciation of the euro versus other currencies (103.2 million euros) and of the changes in the scope of consolidation caused by the inclusion in the Group of Newlat S.p.A., Carnini S.p.A. and other companies (101.2 million euros) and the disposal of Italcheese S.p.A. (about 10 million euros), revenues show an increase of 5.8%. Higher unit sales for all product categories in South Africa, made possible by a strong local economy and better market penetration, coupled with an increase in shipments of fruit juices in Italy and Venezuela and a rise in unit sales of cheese in Canada, account for this improvement, as well as a general worldwide increase in prices.
EBITDA grew to 254.1 million euros, compared with 246.7 million euros in the first nine months of 2006, a gain of 7.4 million euros (+3.0%). Restated to eliminate the impact of the appreciation of the euro versus other currencies (10.2 million euros) and the changes in the scope of consolidation caused by the inclusion in the Group of Newlat S.p.A., Carnini S.p.A. and other smaller companies (3.7 million euros) and the disposal of Italcheese S.p.A. (-0.4 million euros), EBITDA totaled 260.2 million euros, up 13.5 million euros (+5.5%). This improvement is mainly the result of a more favorable product mix, with a greater preponderance of products with a high value added, and a reduction in operating costs. This reduction was achieved despite a worldwide rise in the price paid for raw milk, which could be recovered only in part by increasing list prices.
Group interest in net profit totaled 276.3 million euros, or 179 million euros more than the 97.3 million euros booked in the first nine months of 2006. This increase is attributable primarily to the settlements reached during the period, a reduction in average borrowing costs and indebtedness, and an increase in the income generated by the liquid assets invested by the Group’s Parent Company.
It is important to note that the Group operates almost exclusively at a local level, both producing and then selling its products in the same market. Its export business is very small and not significant. Consequently, fluctuations in foreign exchange rates have no effect on the Group’s currency exposure, causing exclusively foreign exchange translation differences.
The Group’s net financial position improved significantly during the first nine months of 2007, with the balance changing from indebtedness of 170 million euros at December 31, 2006, to net financial assets totaling 327.6 million euros at September 30, 2007, a net gain of 497.6 million euros. The following developments account for most of this improvement:
• The cash flow from operations, net of changes in operating working capital and after capital expenditures and income tax payments, amounted to 67.7 million euros.
• Cash from litigation settlements totaled 257.4 million euros, which is the net result of proceeds of 302,7 million euros generated by settlements reached between the end of 2006 and the third quarter of 2007 and legal costs amounting to 45.3 million euros (attributable both to 2006 and 2007).
• Cash flow from non-recurring transactions totaled 217.8 million euros. This amount is the net result of proceeds generated by the disposal of non-strategic non-current assets (247.8 million euros), less outlays for acquisitions of equity investments (14.2 million euros) and payment of unsecured claims (9.8 million euros).
• The cash flow from financial transactions reflects net financial income of 0.9 million euros, dividend payments totaling 43.4 million euros and proceeds of 7.3 million euros generated by the exercise of warrants. Sundry items totaled 1.5 million euros on balance.