July 31 - Ad Veenhof, Wessanen CEO, says: “Obviously, we are encouraged that in the current economic climate all four businesses continue to show solid top-line growth figures, which were higher than the previous quarter and at or above our growth target levels for the year. The development of cash generated from operations and net debt are also favorable, taking into account the dividend payment of EUR 27 million. The bottom-line performance, however, was below expectation, mainly due to a number of reasons. First, Tree of Life North America was faced with escalating fuel prices, but has since changed its fuel surcharge methodology to avoid the impact of major price fluctuations in the future. Secondly, the fall of the British Pound had a negative effect on the operating result of our UK operations. In the second half of the year, cost control, sourcing improvements and price increases will make up for this currency effect. Thirdly, in the branded business we have moved to increase our investments in advertising and promotion. In addition, this quarter's investments covered a larger share of our annual budget than usual. Finally, as indicated before, our European bottom-line was impacted by integration costs related to Favory Convenience Food Group. The integration will be completed in the third quarter.
Highlights
Revenue in Q2-08 was EUR 389.1 million, against EUR 391.9 million in the same period last year, including a negative currency effect of EUR 40.4 million. Autonomous sales growth was 6.3%.
Operating result (EBIT) in Q2-08 decreased, including negative currency effects of EUR 2.2 million, by EUR 1.3 million to EUR 14.3 million (Q2-07: EUR 15.6 million).
Net result was EUR 8.6 million in Q2-08, compared to EUR 10.4 million in Q2-07.
Net cash flow from operating activities was EUR 18.6 million in Q2-08 (EUR 1.6 million in Q2-07), driven by improved working capital efficiency.
Interim dividend of EUR 0.20 is payable on August 13, 2008.
CEO statement
Ad Veenhof, Wessanen CEO, says: "Obviously, we are encouraged that in the current economic climate all four businesses continue to show solid top-line growth figures, which were higher than the previous quarter and at or above our growth target levels for the year. The development of cash generated from operations and net debt are also favorable, taking into account the dividend payment of EUR 27 million. The bottom-line performance, however, was below expectation, mainly due to a number of reasons. First, Tree of Life North America was faced with escalating fuel prices, but has since changed its fuel surcharge methodology to avoid the impact of major price fluctuations in the future. Secondly, the fall of the British Pound had a negative effect on the operating result of our UK operations. In the second half of the year, cost control, sourcing improvements and price increases will make up for this currency effect. Thirdly, in the branded business we have moved to increase our investments in advertising and promotion. In addition, this quarter’s investments covered a larger share of our annual budget than usual. Finally, as indicated before, our European bottom-line was impacted by integration costs related to Favory Convenience Food Group. The integration will be completed in the third quarter.
Despite these events, which are not expected to recur, we maintain our growth and earnings forecasts for the year based on solid sales growth, good cash flow development and an improvement in operating result in the second half of the year."