Madrid, 3 March 2008 - Grupo SOS, brand leader in the segments of vegetable oil, rice and biscuits, doubled net profit in 2007 to EUR 26.1 m, an increase of 236% versus 2006.
Group turnover last year was EUR 1.40 billion, down –4.5% on the 2006 figure, mainly as a result of the fall in the mill-gate price of olive oil. However, profits rose by 24.4%, with an EBITDA of over EUR 100.5 million.
The highlight last year was the recovery by the vegetable-oil division, where EBITDA moved up by 68.03% to EUR 59.5 million. These good results were due to the stability of mill-gate olive-oil prices thanks to high availabile supplies in the 2006/2007 crop year. Prices fell by –26% compared with the previous crop year, when price volatility had been the order of the day.
Lower and more stable input prices meant that a significant proportion of the reduction could be passed on to consumers, encouraging stronger sales and better returns. This was particularly true in export markets, where volume sales rose by 10.7%. The markets showing most growth were those where Grupo SOS is well positioned (United States, Australia, Canada, France and Brazil), together with emerging markets (Mexico and India).
In Italy the SOS Italian brands, led by Carapelli and Sasso, consolidated their market leadership, obtaining a combined volume increase of 22.1% versus the 2006 figures and maintaining an upward trend.
Overall, more than 50% of the vegetable-oil division’s EBITDA came from exports, which thus compensated for the slowdown in domestic consumption while at the same time laying the foundations for international development of the olive-oil business.
In seed oils the rise in world demand, combined with the surge in biofuels and the fall in the supply of oil-bearing seeds due to adverse weather conditions, led to a significant increase in mill-gate prices throughout the world. Although this affected the results obtained in this segment, particularly in the second half of 2007, Grupo SOS succeeded in consolidating the leadership positioin of its brands in both Spain and Italy. The acquisition in Italy of the Friol brand was particularly helpful in this sense.
In all, the vegetable-oil division accounted for 63.1% of Group sales and 59.3% of consolidated EBITDA.
With regard to the rice divison, the rundown of world stocks was the main cause of major increases in the price of milled rice. In Spain alone input costs rose by 27.4% in 2007.
Notwithstanding, Grupo SOS achieved notable growth in its rice activity in Portugal and consolidated its leadership position in Spain and the Netherlands, with only small adjustments in profitability as a result of the higher input costs. On the other side of the Atlantic the brands of American Rice saw significant growth in the domestic market. The good performance of the rice business in America contributed significantly to the overall increase in the performance of the rice division, with EBITDA moving up by 51.6%.
The rice division represents 19.9% of total Group turnover and 18.1% of consolidated EBITDA.
The biscuit division was also affected by the increase in the cost of raw materials, forcing the company to adjust its downstream prices in the second half of the year. However, the impact on the profitability of the biscuitmaking division was less severe than first feared, thanks to the growing preponderance of added-value biscuits in the division's product range. These biscuits are less sensitive than standard biscuit formats to increases in the cost of basic inputs.
The biscuit division accounted for 9.8% of turnover and 21.7% of Group EBITDA. Lastly the diversification division was also hit by rising costs, which influenced the result at EBITDA level. In table olives, although sales were up, the company was unable to claw back the advertising outlay needed to familiarise customers with the new packaging format, Tetra Recart.
Diversification represents 7.2% of Group turnover and 1.0% of EBITDA. In short, 2007 was a difficult year due to the continuing rising trend in the cost of inputs, especially in the rice, biscuit and seed-oil businesses. However, stable oliveoil prices permitted a strong recovery in the vegetable-oil division overall, with a particularly good showing in exports. In fact, export sales by Grupo SOS in 2007 accounted for 58% of the Group’s global turnover.