Provimi reports increased feed margins

Company finds challenges in Europe, expects to beat 2010 numbers

Having completed the disposal of its petfood business in June, Provimi has presented the first half-year financial results as a group focused entirely on commercial-animal nutrition. These results showed an 11.5% increase in revenue to €871 million from €782 million for January through June 2010, while the gross margin climbed 5.2% to €237 million.

There was a 20.3% rise in earnings before interest, taxes, depreciation and amortization to €86 million, with 45.9% of this coming from the group’s performance in target markets of Latin America, Russia and Asia. Solid gains in these areas gave a 9% growth margin increase for its feed premix and specialties business. In Brazil the rise was 9.8%, attributed mainly to achieving 4.5% more volume in the premixes and specialty feeds sold to Brazilian customers. In Russia the EBITDA was up by 19.4%, helped by new contracts with large integrators in the premix and additive segments.

Provimi’s annual report for 2010 had explained that only 15% of the total gross margin last year arose from sales of complete feeds, after the exclusion of petfoods and divested enterprises. Although complete feeds accounted for 25% of regional gross margin in Europe and 21% in Russia, in North America their proportion was just 4% and they did not contribute in Asia or Latin America. Within Europe, the range went from 55% in eastern states to 29% in the south and 1% in the west. Accounts for the first half of 2011 indicate weak sales of complete feeds in southern Europe, but some success in maintaining complete feed volumes in Poland despite market conditions described as very challenging.

The group’s managers say they expect to deliver an EBITDA of €175 million for the full year in 2011, meaning a 10.9% increase on 2010. They also reported that the new Provimi feed plant at Nanning in China is due to become operational by the end of the year and that they are continuing to work with advisers JP Morgan in conducting a strategic review of the total business.