Trading update Q3 2018: Strong operating result despite lower revenue
9m and Q3 2018 highlights
· Autonomous growth in own brands 0.9% for 9m (Q3: (1.5)%)
· EBITE of €42.9 million, equal to 9.2% of revenue, for 9m (Q3: €14.6 million, 10.1% of revenue)
· Abbot Kinney's, innovation leader in plant based yoghurt alternatives, acquired per 10 September 2018
Q3 review
Overall, own brands growth was below our expectations in Q3 while profit delivery was strong at 10.1% EBITE in % of revenue.
We expect the corrective action plans that we have put in place since Q2 to bring a return to revenue growth for own brands in Q4. Based on the results of Q3, however, we expect revenue growth at the bottom end or possibly below the previous guidance range for the year as a whole.
One main reason for the unsatisfactory own brands growth in the quarter was an accelerated decline of our brands in the UK due to Grocery listings we previously lost and lack of promotional support from the trade. Furthermore, the hot summer had an unexpectedly strong impact on our Tea and Coffee business which affected Zonnatura, Clipper, Alter Eco and Destination across countries.
In the French Grocery business, growth of our biggest brand Bjorg improved in Q3 while Gayelord Hauser continued to decline and Alter Eco (coffee) was also softer than in H1. Bonneterre had a difficult quarter as the HFS channel in France decelerated and we felt the impact of the previously announced restructuring related to the relocation of our distribution center.
We saw good results on Isola Bio in Italy as well as Allos and Tartex in Germany.
In Spain we continued to grow strongly in the Grocery channel with our Ecocesta brand.
The Private Label business declined at low double digit levels in Q3, in line with expectations. We reduced some Distribution activities in Spain as we focus on our own brands.
In Q3 revenue decreased by 2.0% to €144.2 million. Autonomous revenue growth of our own brands was (1.5)% and total autonomous revenue growth amounted to (2.2)% as a result of the further reduction of the private label and distribution business (around (10%)). The acquisition of Abbot Kinney's contributed 0.1% and the appreciation of the British pound contributed 0.1%.
EBITE increased by €1.8 million to €14.6 million, mainly driven by positive gross margin development and lower A&P due to different phasing of expenses compared to prior year.
Depreciation and amortisation expenses decreased by €0.1 million to €2.3 million. Exceptional items amount to €(0.2) million.
Income tax expenses were €(3.7) million. The effective income tax rate in the nine-month period ended 30 September 2018 of 30% is based on the latest estimate of the weighted average income tax rate for the full year.
Analyst & investor meeting
At 10h00 CET, an analyst & investor conference call will be hosted by Christophe Barnouin (CEO) and Ronald Merckx (CFO). The dial-in number is +31(0)20 531 5851. There will also be a live audio webcast via www.wessanen.com
The press release and presentation are available for download at www.wessanen.com.
12-02-2019 Publication Q$ and FY 2018 results
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Wessanen via Globenewswire
