Amsterdam / NL. (cb) Corbion reported sales of 229.9 million EUR in the first quarter of 2017, an increase of 0.7 percent. Organic sales growth was -2.3 percent, mostly due to a volume decrease in Food, partly offset by an increase in Biochemicals. Ebitda excluding one-off items increased by 9.4 percent to 47.8 million EUR.
«The start of the year has been encouraging in all segments, except for Bakery, which fell short of our expectations. Profitability exceeded expectations as mix improvements continued to push underlying margins higher. The PLA joint venture with Total became operational in early March», commented Tjerk de Ruiter, CEO.
Key financial highlights first quarter 2017
- Net sales organic growth was -2.3 percent; volume growth was -2.9 percent
- Ebitda before one-off items was 47.8 million EUR, an organic increase of 5.1 percent
- Ebitda margin before one-off items was 20.8 percent
- Positive one-off items of 5.3 million EUR related to the establishment of the PLA joint-venture with Total
- Operating result was 41.0 million EUR, an organic increase of 28.6 percent
Biobased Ingredients
Net sales in Biobased Ingredients, which encompasses Food, Biochemicals, and central costs, increased by 1.6 percent, mostly driven by a positive currency contribution of 3.8 percent, offset by an organic decrease of 1.5 percent. The Ebitda margin excluding one-off items increased from 19.6 percent to 21.9 percent, as both the Food and Biochemicals business segments managed to improve their margins, mostly driven by positive portfolio mix effects and lower input costs.
Business segment Food
Net sales decreased organically by 3.5 percent. A decrease in sales was expected for the first quarter as we lost some volumes in more commoditized parts of the US meat market and optimized the customer and SKU portfolio in Bakery in Q2 2016. However, the sales reduction was more pronounced than anticipated due to losses at frozen dough, and challenges in executing our Bakery channel strategy. Consequently, we are accelerating the overhaul of the commercial organization in Bakery and we are taking measures to improve customer service levels. In Meat in the US we regained some of the lost volume from last year, but more importantly, the portfolio mix shift towards natural preservation solutions continues to support margin improvements. Meat sales growth outside the US was mainly driven by Latin America. In other markets (Beverages, Confectionery, Dairy), sales increased slightly. The Ebitda margin improved from 20.3 percent to 22.2 percent due to mix improvements and lower input costs.
Business segment Biochemicals
Net sales increased organically by 5.3 percent. All markets grew except for a small decrease in animal health. Agrochemicals returned to modest growth after a very difficult 2016. A substantial part of the Biochemicals sales growth was driven by an excellent quarter in medical/pharma which was helped by phasing. The high sales growth in medical/pharma contributed to the Ebitda margin expansion from 26.3 percent to 28.8 percent due to a positive mix effect.
Biobased Innovations
From March 2nd, when the PLA joint venture with Total became operational, lactide and PLA sales were no longer recorded in Biobased Innovations but rather in the PLA joint venture with Total. The joint venture will continue to seed the market.
Outlook FY2017
For Biobased Ingredients we expect quarterly sales growth to improve as we move further into 2017. However, as the losses in Bakery will dampen growth, we now expect 2017 net sales growth in Biobased Ingredients to end up below the multi-year guidance bandwidth of 2-4 percent. Nevertheless, given the positive portfolio mix developments in the first months of the year, we continue to expect our total Corbion Ebitda excluding one-off items for 2017 to be slightly below that of 2016 (170.1 million EUR).
