Veghel, 17 July 2008 - Sligro Food Group N.V. posted sales of Euro 1,078 million in the first half of 2008 (26 weeks), an increase of Euro 118 million or 12.3% on the Euro 960 million sales generated in the same period in 2007. Net profit for the first half rose 11.3 % to Euro 28.5 million. Earnings per share for the period amounted to Euro 0.65, an increase of 10.2%.
Organic growth in total sales amounted to 8.3% (Q2: 7.5%). The growth in food retail sales also reflects changes in the storemix as a result of the opening of new supermarkets and the transfer of stores to Spar Holding.
As predicted, the operating result on the food retail operations was positive in the first half of 2008 (€2.1 million), after a slightly negative operating result in the second half of 2007, but was lower than in the first half of 2007 (€5.1 million). Since then, many relatively small stores have been added to the estate and the profitable sales to MeerMarkt and Attent operators have been transferred to Spar Holding, which generates a share in the result for Sligro Food Group. The improvement in the results compared with the second half of 2007 reflects lower non-recurring expenses and operational improvements.
Organic sales growth in the food service operations amounted to 9.2% (Q2: 8.0%), due to the acquisition of new customers, higher expenditure by existing customers and expansion of the branch network. The operating profit on food service operations continued to improve, increasing by €5.1 million to €37.7 million, reflecting strong sales growth and improvements in the logistics infrastructure.
Group operating profit rose by €1.8 million to €41.0 million, but declined as a percentage of sales from 4.1% to 3.8%. The share in the results of associates increased by €1.9 million to €2.2 million, partly due to the investment in Spar Holding.
Outlook
Given the economic conditions, growth in the markets we serve will be rather less robust than in the first half of 2008. However, since the market segments in which we operate are relatively insensitive to economic cycles, we expect the slowdown in growth to be limited.
Market analysts predict that supermarket sales will not grow as fast in the second half of 2008 as they did in the first six months, continuing a trend that became apparent in the first half. Fortunately, our retail formats are benefiting from our investment in stores in recent years and the commercial and operational improvements we have made. Various programmes are under way to increase sales and margins and reduce costs still further, because there is still much room for improvement in the food retail operations. For that reason, we expect our formats to achieve better like-for-like consumer sales growth compared with the rest of the market in the second half than in the past period.
That will also contribute to the ongoing recovery in the operating result of the food retail operations in the remainder of the year. We expect organic growth by the foodservice operations to be slower than in the first half of 2008, but faster than the markets we serve. Foodservice is expected to achieve a further improvement in its relative operating result in the second half of 2008. One factor here has been gains made in logistics efficiency despite the sharp rise in diesel prices.
The non-recurring tax-free book profit of €9.4 million on the transfer of the MeerMarkt and Attent store formats to Spar Holding, which was recognised in the second half of 2007, has a significant effect on the basis of comparison with 2008.