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Cosun achieves satisfactory result

18 March 2004

Royal Cosun, a manufacturer of natural foodstuffs and food ingredients, achieved a consolidated turnover of EUR 1,321 million for 2003, an increase of 20% in comparison with 2002. Operating profit amounted to EUR 34 million (2002: EUR 56 million). Although the reported operating profit was lower than in 2002, Cosun is satisfied with the outcome since the decline is attributable to non-recurring items, the main ones being the write-down of capitalised goodwill and the cost of closing certain production sites. After adjustment for these one-off effects, operating profit was more than 20% higher. On balance, net profit was EUR 7 million lower at EUR 31 million.

 

Performance by business group

The basic ingredients group realised a modest increase in its results, mainly because of better than expected results at Suiker Unie thanks to an excellent sugar beet harvest and, on balance, a lower production levy and quota reduction. A sharp increase in inulin sales boosted Sensus’ turnover and results. Nedalco had a difficult year owing to the very low alcohol prices.

 

Aviko again strengthened its market position, despite some contraction in the market for pre-fried potato products. Its good performance was due chiefly to the successful introduction of a series of new products. Aviko’s turnover for 2003 was included in Cosun’s consolidated figures for the whole year in 2003 (2002: four months), which significantly increased Cosun’s turnover.

 

The compound ingredients group saw little change in its turnover owing to adverse currency movements and the flat economy in Europe, which was particularly marked in the foodservice.
Unifine Döhler had to work on declining markets in several countries. The activities in Spain, where an acquisition was made, were expanded. On the whole, turnover was about the same as in 2002 but the result came under pressure. After a difficult year in 2002, Unifine profited from operational improvements that triggered a significant increase in results. At the beginning of February 2004, Unifine’s Canadian operation (Richardson) was sold to Heinz. The transaction was prompted by the concentration on sauces and spices in the European market and the limited synergy between the European and American activities. SVZ combined positive results on its traditional products in both Europe and the United States with a rapid growth in sales of newer products such as Verifruit and compounds.<br><br>Cosun’s 50% participating interest, Advanta, improved its results in 2003 after returning to profit again in 2002. The disposal process for this participating interest is expected to be rounded off in 2004.

 

Prospects
The harvest in 2003 was exceptionally good. If the harvest and the production levy return to normal in 2004, Suiker Unie’s results will accordingly be lower than in 2003. Sensus may further improve its results through higher sales of both inulin and fructose. Nedalco is still facing low alcohol prices. Some compensation for the lower results forecast for the basic ingredients group may be found in an expected improvement in results at Aviko and the compound ingredients group. Aviko reduced its overcapacity in 2003 and is expected to benefit in 2004 from its lower cost base and solid commercial position. The turnover and results of the compound ingredients group are expected to be higher. Unifine Döhler and Unifine are poised to benefit from a recovery in the foodservice market and SVZ is expected to continue the growth in its turnover and results. Advanta is looking forward to a good result in 2004 but its contribution to Cosun’s results will be determined in part by the progress made with the disposal of this participating interest.