Madrid, 16 May 2006 - The SOS Group, brand leader in the segments of vegetable oils, rice and biscuits, today reported to the National Securities Market Commission (CNMV) the results it obtained in the first quarter of 2006 in which it generated sales of EUR 333.7 million, 54.2% more than in the same period of 2005, leaving a net profit of EUR 4.7 million. EBITDA was EUR 18.9 million which, though a drop of –15.5% on the results of the first quarter of 2005, reflects the recovery in profitability in comparison with the results of the final quarter of last year.
To be precise, in the last quarter of 2005 the Group returned negative EBITDA for its vegetable oil division as a consequence of the massive increase in farmgate prices charged by the producer associations and cooperatives, prices that rose month after month throughout the year. The Group chose not to pass these higher input costs on to its customers. In January, however, the Group adapted its selling prices to market conditions, recovering the margins it obtained prior to this surprising change in market conditions.
The decision to stand by its undertakings to customers, coupled with the sound reputation of its brand names, allowed the Group to overcome the difficulties caused by the inflated increase in farmgate prices and maintain, when not increase, the rate of its international expansion in the vegetable oil sector. Divisional overseas sales rose by 40%, while volume sales fell by only –3%. This can be considered a notable achievement when compared with the industrywide decline in olive oil exports as a consequence of the price rises.
In all, the sales of the vegetable oil division rose by 81.5%, to generate a positive EBITDA of EUR 6.4 million. This division accounted for 64.1% of Group turnover and 33.9% of consolidated EBITDA.
The returns obtained by the rice division also improved significantly. In the domestic market, though sales were flat, the Group succeeded in moving a higher proportion of value-added products such as its SOS.Sabor.es range of instant rice dishes, while the conventional SOS rice brand held its market leadership. Internationally margins also increased, both in Portugal and in the US, where American Rice performed well, thanks in the main to the operating adjustments introduced last year. We also draw attention to the incorporation of the Dutch rice brand Lassie, the market leader in the Netherlands. Total turnover of the rice division rose by approximately 33%, while EBITDA increased by nearly 50%.
With respect to the biscuit division, as usual it made a significant contribution to Group results in terms of profitability, with sales increasing by 22% and EBITDA rising over the same period of 2005 by 12.4%. This significant increase in sales in what is by any standards a mature market was the result of the improved mix obtained by the introduction of the vegetable-oil ingredient Oleosán in all the products of the Cuétara biscuit range.
While reporting its first-quarter results the SOS Group also announces that it is participating in several programmes designed to develop renewable energy sources, notably the production of biodiesel. The main operators in this sector are working with SOS to develop projects, some of which are already off the ground (for example, Cenit) while others are still on the drawing board. The prospect of working on these projects is a consequence of the Group’s experience and know-how in most of the processes in the value chain, placing the SOS Group is in a good position to take a leading role in these initiatives without jeopardising its existing activities.
Specifically, by means of its affiliate Koipesol Semillas, which produces sunflower seeds capable of optimising both farm and industrial output, and ACISA, another affiliate which markets the seeds and buys in the harvested product, the Group already enjoys a major presence in the primary production phase. In quantitative terms, 25% of the land sown for sunflower in Spain employs seed sold by ACISA, while 33% of the annual Spanish sunflower crop is processed by SOS. In terms of milling, Group facilities have a combined capacity of 240,000 tonnes, of which approximately half is converted into sunflower oil. In short, this close linkage with the initial phase of sunflower production makes the Group well placed to become a key player in the production of biodiesel energy.