Madrid, 15 November 2007 - The SOS Group, brand leader in vegetable oils, rice and biscuits, obtained net profit of EUR 13.5 million in the first nine months of the year, 10.82% up on the same period of 2006.
Total Group turnover in the third quarter was EUR 1.02 billion, a downturn of –3% on the third quarter of 2006, largely as a consequence of slackening mill-gate prices for virgin olive oil. However, profitability rose decisively in the quarter just ended, with EBITDA increasing by 43% to EUR 69 million.
The vegetable-oil division showed the greatest increase in profitability, reporting EBITDA of EUR 39 million, 53% up on the first nine months of 2006. This was thanks to the fact that the mill-gate price of olive oil stabilised in view of the large available supplies of the 2006/07 crop year and the reduced input costs drove both exports and domestic consumption.
Notwithstanding, domestic consumption, i.e. Spain, seriously impaired by the massive price increases of the preceding year, moved up relatively slowly; it has yet to recover the levels achieved in 2004/05. The Group’s modest results in its home market were compensated, however, by the excellent performance in exports, which rose by 14.1% in volume terms versus the previous year.
In the Italian market the Group brands Carapelli and Sasso reported a combined volume growth of 20.7% in the third quarter of 2007. The improved profitability of the Italian business was aided not only by stable mill-gate prices but also by fully integrating Carapelli within the Group’s business model.
The seed-oil segment of this division was affected by inflationary price conditions which badly dented demand, flattening the growth curve seen previously. In Italy consolidation of the Friol brand, the market leader in the deep-frying seed-oil segment, helped to offset the overall slowdown while also consolidating the Group’s leading position in the Italian market.
The vegetable-oil division accounted for 63.7% of Group turnover and 57.4% of total consolidated EBITDA.
In the rice division the decline in world stocks and the prospect of a low final yield in the 2007/08 crop year in both the European Union and the United States sent mill-gate prices climbing. Even so, results held firm in the Group’s domestic market, Spain, in terms of both turnover and profit. In international markets we highlight the good performance of sales in Portugal and the growth achieved by American Rice (ARI) in the United States, where the Group’s brands have succeeded in consolidating a strong position in retail trading channels.
Overall the rice division accounted for 19.4% of Group turnover and 19.2% of consolidated EBITDA.
In the biscuit division the increase in input costs obliged the Group to raise downstream prices. However, the affect on profitability was limited by the greater proportion of sales of value-added biscuits, for which input price volatility is a less significant factor than is the case with basic products.
The biscuit division accounted for 9.5% of total Group sales and 22.5% of consolidated EBITDA.
Finally, the results of the diversification division were stable in comparison with the same period of 2006. The division accounts for 7.4% of total Group turnover and 0.9% of EBITDA.
To sum up, the results obtained in the third quarter of the year confirmed margin recovery in the vegetable-oil division thanks to stable mill-gate prices, enabling the Group to achieve a considerable increase in export sales, while domestic consumption recovered more slowly. In rice and biscuits, the strength of the SOS brands allowed the Group to offset the negative effects of higher raw material costs.