Ebro Foods: Q3-2023 earnings validate value strategy

Madrid / ES. (epg) The Group’s consolidated third quarter earnings confirm the extraordinary performance of its business, Spain’s Ebro Foods S.A. announced with its Q3-2023 financial statement. Thanks to its geographical diversification strategy, more than 94 percent of the Group’s adjusted Ebitda is obtained in international markets and only 5.4 percent in Spain. The year-end forecasts contemplate an adjusted Ebitda of EUR 372-378 million, far outstripping that posted in 2019 before shredding the Group’s dry pasta businesses (EUR 342.7 million).

The earnings posted in the first nine months of the year confirm the Group’s positive evolution throughout 2023. The Group’s excellent performance during the year can be put down to numerous factors, including the coming on stream of our latest investments, an upturn in the yield of our pasta businesses in all markets, especially in the fresh pasta segment, our increased investment in advertising to maintain the loyalty of consumers who continue to opt for our brand differentiation, our geographical diversification and the easing of inflation in areas such as logistics, energy and certain rice varieties.

Against this backdrop, all our financial metrics continued growing steadily throughout the period. We posted a net turnover of EUR 2,306.8 million, 5.7 percent more than in the third quarter of 2022, boosted mainly by the outstanding performance of the Rice Division. The Adjusted Ebitda rose 16.1 percent year on year to EUR 284.3 million, one of the best Ebitda we have ever achieved, exceeding even those recorded before we sold off our Dry Pasta Divisions in North America and France. Net Profit grew by 60.9 percent to EUR 140.1 million, comparatively outstripping the other results because the Q3 accounts of 2022 included the extraordinary loss of EUR 20 million sustained on the sale of the Roland Monterrat business. It also includes a EUR 1.8 million gain on the sale of the Woodland plant. Our Net Debt stands at EUR 588.2 million, EUR 174.4 million less than at year-end 2022. This includes the annual dividend payments and EUR 102.5 million in CAPEX investments.

Core business results

Rice Division: With regard to raw materials, the extreme heat waves suffered in Europe adversely affected the rice crop. In contrast, the rain in California and Italy favoured a good harvest of Japonica rice. As for Basmati, India has announced export restrictions, with minimum prices both there and in Pakistan that are ramping up price tensions in the market. We have managed to circumvent the impact of this situation thanks to our extensive stock.

As regards the evolution of business, our brands remain strong, maintaining and even increasing their market shares in some of our principal countries. We highlight the good performance of our microwave products, more than 40 percent growth in the Middle East through the brands Tilda and Abu Bint, and the consolidation of our businesses in Africa, with the leadership of Cigala in Morocco and our strong entry into other countries such as Ghana and Libya. The division posted a turnover of EUR 1,828.9 million and an adjusted Ebitda of EUR 232.3 million.

Pasta Division: Regarding raw materials, after several fluctuations during the year the price of durum wheat has now stabilised at around EUR 400 per tonne. As far as business development is concerned, we highlight the increased sales of fresh pasta, the good performance of Bertagni, which has increased its listings and is gaining strength among distributors, and the growth of Garofalo in the USA and Canada. The division posted a turnover of EUR 482.4 million and an adjusted Ebitda of EUR 62.4 million.

An increasingly strong, sound and diversified Group

Year-end forecasts confirm once again the wisdom of the diversification strategy, investments, divestments and business focus of the Ebro Group. Barely four years after deciding and pulling out of the dry pasta businesses in France and North America, the Group is on course to post an adjusted Ebitda of EUR 372-378 million, far outstripping that posted in 2019 (EUR 342.7 million) when those businesses were still part of our Group. This is even more noteworthy considering that we have reduced our debt by EUR 452 million from the level recorded in Q3 2019, having made major investments in CAPEX and paying out more than EUR 737 million in dividends to our shareholders.

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