Profits at Spanish food company Ebro Puleva increased by 15.2 per cent in the first nine months of the year to €87 million, allowing the company to reduce its debt by 24 per cent and pave the way for more strategic acquisitions.
The dairy product, rice and sugar group has been increasingly active on the takeover market in recent months, strengthening its rice operations in particular with deals with Riviana Foods and Kraft, and the company's efforts to focus on its three core business streams mean that further acquisitions and partnerships are a distinct possibility.
But this new focus has also meant the disposal of a number of non core businesses, such as Jesus Navarro sold in July and the Proterra unit in Chile, sold last year. This in turn has led to a decline in sales over the first nine months, and turnover for the period was 8 per cent lower than 2002 at €1.5 billion. The sale of Proterra alone reduced sales by €53.7 million, while Jesus Navarro had sales of around €8 million.
The Azucarera Ebro sugar unit lifted sales by 5.8 per cent during the period, helped by an increase in sales to industrial clients and to the retail trade, as well as a significant increase in exports.
The sugar operations are also being streamlined, with the planned closure of two refineries in the Castilla y Leon autonomous region.
The dairy product arm continued to improve profit levels, helped by a new focus on high-margin functional milks and the cessation of a number of low added value products. Within the dairy market, the Puleva brand saw sales increase by 7 per cent in value terms during the period.
The company is keen to expand its functional dairy activities, and spent €11 million during the quarter on acquiring licences from US-based pharma group Abbot Labs which will allow it to sell baby milk and cereal products under the Puleva brand.
Herba, the company's rice arm, showed a marked recovery in the third quarter after difficulties earlier in the year, in particular for bulk rice sales. But branded product sales also improved during the period, with profits increasing by 17 per cent year-on-year.
Despite the sale of Proterra, Ebro Puleva still has a foothold in Chile through its 23 per cent stake in the local company Iansa, and this operation also showed improvement during the period. Sugar volumes rose by 14 per cent in the January to September period, but the poor profit levels at the unit continued to weigh on the company's overall results.
A recent ruling by the Chilean parliament effectively limiting sugar imports for the next 10 years should help Iansa's future prospects, however.
The solid gains made so far this year have also prompted Ebro Puleva to predict a substantial improvement in full-year figures for 2003. In fact, the company said it expected the fourth quarter of the year to be one of the best it had ever seen, giving further impetus to results for the year as a whole.