The consolidated earnings obtained by the Group in the first quarter of this year were dented, among other factors, by the hike in commodity prices in the rice division. This placed a substantial burden on the performance of the North American rice business owing to the time lag in passing on prices.
Against this backdrop, Ebro posted a net profit of €43.4 million in the first three months of 2018, 15.9% down on the same period of 2017. Its net turnover was down 0.9% year on year to €628.7 million owing to the lowering of the dollar exchange rate, from 1.06 to 1.23; at constant exchange rates, sales revenue would have grown by 3.9%. The EBITDA, or gross operating profit, dropped 15.9% to €79.1 million.
Net debt rose to €610.1 million, practically €93 million more than at year-end, owing to the acquisition of the fresh pasta company Bertagni and the ramp-up of working capital in both divisions so that they can stock up on raw material in anticipation of possible adverse situations.
In a prior scenario of record results in both the European and North American businesses, Riviana has been temporarily affected by a number of extraordinary factors, such as:
1. The price hike in raw materials (aromatic rice from Asia and American long-train rice). The new prices are currently in the process of confirmation so we expect the situation to ease later on in the year.
2. The situation of full employment, leading to a shortage of personnel for some of our plants.
3. Higher logistics costs, owing to tighter regulation.
4. And higher fuel prices.
In a market with moderate growth, our brands achieved a positive global performance. They have maintained their growth through innovation, especially our microwave pots, healthy and organic products and all our value-added product ranges.
The division turnover was €346.1 million and its EBITDA stood at €44.8 million.
In this division we have outperformed the market in value.
The raw material situation is stable and prices are not expected to rise in the near future.
Panzani performed well in France, increasing its market share in all the segments in which it operates.
Garofalo maintains satisfactory expansion in countries such as France, Spain and USA, where its super premium quality is recognised.
And in the USA, Riviana has begun to reap the benefits, increasing its market shares through heavy investment in advertising to highlight its brand attributes, along with a strong commitment to health categories, especially gluten free.
The division turnover was €296.2 million and its EBITDA stood at €34.8 million.
Better full-year prospects
As we have seen, the Group has begun the year grappling with complex temporary circumstances, which will revert as the year goes on. But we have also achieved very positive landmarks, which reflect the excellent health of our businesses.
In this regard, we highlight the acquisition of the fresh pasta company Bertagni, which will position the Group as the second fresh pasta manufacturer in the world; the upturn in our North American pasta business, which, after several difficult years, has now returned to the path of growth; and the good performance of our leading brands, which continue consolidating their leadership and increasing their market shares, confirming consumers appreciation of our products and constant search for new, differentiated, healthy solutions.
The strength of our business, together with the measures implemented in sourcing, the start-up of major organic development projects and the launching of new products on the different markets, will have a positive effect on our profitability over the year.