Parmalat, the Italian dairy group, has reported a slight decline in sales for the 2002 financial year, due entirely to currency devaluations which impacted its Latin American business.
Turnover for the year dipped 2.7 per cent to €7.6 billion, but excluding the impact of currency devaluations, sales would have risen by 8.1 per cent during the year as a result of volume increases of 2.5 per cent.
Parmalat's chairman Calisto Tanzi said that 2002 had been one of the most difficult years in recent history. "The absence of a recovery in the US and western European economies, combined with the threat of war that dominated the political scenario, led to continuing stagnation in industrialised economies. This had a negative impact on emerging markets and above all on Latin America," he said.
"Despite such a difficult business environment, the Parmalat group reported an increase in sales volumes, thanks to the strength of the brand. The group proceeded with its product innovation programmes and with its planned rationalisation and upgrading of production and distribution units, which will lead to cost savings in the coming years."
Tanzi said that EBITDA for the year amounted to €931 million, down 2.1 per cent compared to 2001, although EBIT was up 2.7 per cent to €613 million. Net profits increased from €262.1 million to €269.4 million, largely due to lower tax rates.
The group's European sales rose 5.5 per cent in 2002 to €2.7 billion, with Italy, Spain, Portugal, the UK and Hungary the company's main markets there. The group's EBIT in Europe increased 13.4 per cent to €254 million. The company also increased its market share in Europe - despite flat demand - by a steady programme of new product introductions.
North and Central America saw sales of €2.6 billion, a decline of 2.6 per cent compared to the previous year due to the devaluation of both the Canadian and US dollars against the euro. However, EBIT rose 8.9 per cent to €159 million. The group continued the rationalisation of its operating and distribution structure with the aim of strengthening the North American business, with Parmalat Canada, Parmalat USA, Parmalat Mexico and the North American baked goods division integrated into the new North American organisational structure, which has its headquarters inToronto, Canada.
In South America, sales were down 17.4 per cent to €1.6 billion, due mainly to devaluations, while EBIT for the area amounted to €160 million, a decrease of 17.9 per cent with respect to 2001.
Sales in other geographical areas, such as Australia, China and southern Africa, amounted to €654 million in 2002, an increase of 9.0 per cent, despite the weakness of the South African rand and other southern African currencies. EBIT amounted to €40 million in 2002, up from €32 million in the previous year.
Commenting on the likely performance of the group in the current fiscal year, Tanzi said that the worldwide launch of innovative milks and fruit juices - already rolled out in Italy and other European markets - was continuing, and that organic volume growth was expected to remain in step with the trend seen in 2002.
"The group's growth strategies will concentrate on achieving organic growth. It does not expect to make any significant acquisition over the mid-term, with the possible exception of the purchase of 18.18 per cent of the Brazilian company, Parmalat Administracao, held by institutional investors. The acquisition, scheduled for the end of 2003, will require an investment of almost $400 million dollars and will go ahead should the planned listing of the company's shares not take place," he said.
Parmalat is primarily known as a dairy product supplier, but it also has significant operations in vegetable products, fresh foods and baked goods, as well as minor interests in chocolate, bottled water and ice cream.