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1st half-year: Back to external growth and results in line with our expectations

Mercredi 13 Sep 2017 à 18:00

H1 2017 consolidated results (1 January to 30 June 2017)

Back to external growth
H1 2017 results in line with our expectations

Press release

Avignon, 13 September 2017 - Naturex, the global leader in specialty plant-based natural ingredients, announces its consolidated results for the 2017 first half1:

H1 2017
Message of Olivier Rigaud

 "The 2017 first half marked the end of the simplification phase we initiated two years ago. The road ahead for achieving Bright2020 objectives is now clearly mapped out on the basis of sounder and stronger foundations.

At the FINANCIAL level, continuing efforts to contain overhead expenses and effectively manage working capital, contributed to growth in recurring operational EBITDA. Finally, we have negotiated new financing capacities to prepare for future developments.

As recently announced, we have resumed our expansion through external growth, by acquiring the B2B industrial operations of Haliburton International Foods, specialised in natural vegetable-based solutions and we have entered into exclusive negotiations to acquire a fruit-based specialty business and a production facility in the United States.

To support organic growth, we have invested in drying technology facilities for Vegetable Juices Inc. and bought out the interests of Chile Botanics' minority shareholders2 to create business and sourcing synergies.

This mix of external and organic growth is fully in line with our strategy for accelerating the development of our platform of natural fruit and vegetable-based ingredients.

The Group has moreover also invested in its “natural preservatives” platform to support growing market demand in particular for rosemary, by increasing production capacity at the plant in Morocco and expanding the natural preservatives range to antimicrobials.

In the coming months, we will continue to focus on energizing our business pipeline by accelerating the development of our strategic categories and by applying the same approach to the “natural colours” and “phytoactives” categories.

For the 2017 second half, we will remain fully concentrated on executing our roadmap for a gradual return to organic growth, with a focus on innovation and open innovation."

Olivier Rigaud, Chief Executive Officer and Director of Naturex

H1 2017
Financial Highlights


In €m H1
Change (%) FY
Revenue 207.5 208.0 -0.3% 404.4
Gross margin on COGS 59.4 57.8 +2.8% 112.6
Gross margin on COGS (%) 28.7% 27.8%   27.8%
Recurring operating EBITDA 34.5 33.2 +3.8% 61.4
Recurring operating EBITDA margin (%) 16.6% 16.0%   15.2%
Current operating income 18.1 18.6 -2.6% 31.5
Current operating margin (%) 8.7% 8.9%   7.8%
Net operating income 17.5 19.1 -8.3% 26.7
Operating margin (%) 8.4% 9.2%   6.6%
Net income attributable to Naturex shareholders 10.7 12.2 -12.7% 17.9
Net margin (%) 5.1% 5.9%   4.4%

The Group's half-year consolidated financial statements (including the notes) were presented to the Audit Committee on 7 September 2017 and adopted by the Company's Board of Directors on 12 September 2017.

The consolidated financial statements for the six-month period ended 30 June 2017 are included in the interim financial report published today.


H1 2017
Analysis of revenue and results

Revenue for the 2017 first half3 amounted to €207.5 million, largely stable over the two quarters, compared to the high base for the same period in 2016. Like-for-like (constant currency and structure)4, revenue contracted marginally 1.9%.

This steady performance is on track with the roadmap presented at the start of the year and consistent with the "Simplification and Execution" pillar of our Bright2020 strategic plan.

During this period, we accelerated efforts to reduce the number of SKUs which impacted in part the level of sales of our two business platforms, My Natural Food (€107.1 million) and My Natural SelfCare (€71.5 million). At the same time, progress was MADE in optimising our product mix through our four strategic categories5. Other activities, non-strategic in nature, represented €28.9 million in revenue.

At the geographical level, the deployment of our regional organisation strengthened our presence in emerging countries (revenue of €14.6 million for Latin America and €31.6 million for the Asia-Pacific region) and consolidated our strategic position in the nutraceutical market in North America (revenue of €91.4 million). The EMEA region (revenue of €69.8 million) was in contrast adversely affected by an unfavourable comparison base resulting from decrease in the number of SKUs and the transfer of invoicing for a specialty nutraceutical product to the Asia-Pacific region, masking the positive effects of the commercial approach implemented in strategic categories.

Operating profitability: Activating our performance drivers

These improvements in the structure of our sales mix, combined with operating expense efficiencies and the optimisation of our performance drivers, positively impacted recurring operating profit, in line with our execution plan.

The gross margin on COGS amounted to €59.4 million, up 2.8% compared to the 2016 first half after taking into account the cost of goods sold of €148,0 million which integrates all costs linked to production, including labour costs.

The gross margin as a percentage of sales on that basis represented 28.7% compared to 27.8% in the 2016 first half or an increase of 90 basis points, largely in response to measures adopted to simplify the product portfolio and optimize industrial processes.

The breakdown of expenses by function illustrates the effective management of our expenses and allocation of resources according to the priorities of our strategic plan:

  • Selling and marketing expenses amounted to €14.9 million compared to €15.2 million in the 2016 first half, reflecting the regional deployment of a commercial structure with front-line resources provided to support sales teams. These expenses represented 7.2% of sales, down from 7.3% one year earlier.
  • Research and development expenditures amounted to €7.4 million, up from €5.9 million in the 2016 first half, taking into account the accelerating pace of innovation initiatives within key categories in accordance to the strategic plan. R&D expenditures represented 3.6% of revenue. As a reminder, by 2020 these expenditures should represent 5% of revenue;
  • General and administrative expenses amounted to €16.5 million compared to €18.4 million in the 2016 first half and represented 7.9% of sales compared to 8.8% for last year's same period, reflecting cost control efficiencies and the rationalization of support functions.

Obsolete inventory amounted to €3.5 million compared to €1.0 million in the 2016 first half, an increase linked primarily to the accelerated reduction in the number of SKUs in the period.

Recurring operating EBITDA6 amounted to €34.5 million, up 3.8% for a margin of 16.6% compared to 16.0% in the same period in 2016. This performance illustrates at the same time the effects of the operating levers generated by manufacturing efficiency gains, a higher value added product mix and continuing costs structure optimisation measures.

Current operating income amounted to €18.1 million compared to €18.6 million one year earlier, generating a current operating margin of 8.7%.

Consolidated net operating income amounted to €17.5 million, compared to €19.1 million in the 2016 first half. It should be noted that €1.3 million in exceptional income was recognized in the 2016 first half financial statements from the reversal of impairment charges for the Palafolls manufacturing site in Spain that have been put on the market in 2015 as part of the reorganisation of the pharmaceutical activity.

Finally, after a tax expense7of €3.9 million compared to €6.9 million one year earlier, net income attributable to Naturex shareholders amounted to €10.7 million compared to €12.2 million for the 2016 first half.


H1 2017
Financial position

Focus and discipline for an improved management of flows

The Working Capital Requirement amounted to €182.4 million or 45% of sales at 30 June 2017, compared to €196.4 million at 31 December 2016. This decline reflects a proactive approach to managing cash flows from operating activities:

  • Managing customer credit risk with days sales outstanding (DSO) at 53 days, unchanged from 31 December 2016;
  • A reduction in inventories to 40.5% of sales8 (42.5% at constant exchange rate), down from 46% at 31 December 2016, reflecting the positive effects of inventory categorisation and the accelerated reduction in the number of SKUs;
  • Effective management of supplier payment terms made possible through governance and the monitoring procedures adopted.

Net financial debt amounted to €147.0 million at 30 June 2017 compared to 173.9 million at 31 December 2016. It is noted that in the 2016 first half the Group restructured its financial debt with its banking partners in order to benefit from greater flexibility, notably in connection with future developments.

The Debt-to-EBITDA leverage ratio9 is 2.34 x compared to 2.83 x at 31 December 2016 and gearing10 40.3% compared to 46.7% at 31 December 2016.


H1 2017
Developments and outlook

Developments and outlook

Having completed the simplification process, the Group will focus on energizing its commercial pipeline by accelerating the development of its key product categories11, with for example:

  • The strategy for specialty fruit and vegetables: combining organic and external growth
    On 12 September 2017, Naturex announced organic and external growth initiatives implemented to strengthen its leadership position in the United States for its platform of natural fruit and vegetable-based ingredients. This has involved, on the one hand, the acquisition of the industrial operations of Haliburton International Foods, specialised in natural vegetable-based solutions, negotiations to acquire a fruit-based specialty business and a production facility in the United States, and, on the other hand, the diversification of Vegetables Juices Inc.'s manufacturing base and the buyout of Chile Botanics' minority interests to create business and sourcing synergies.
  • The natural preservatives strategy: organic growth
    The Group has invested in aligning the industrial production capacity of the plant in Morocco with growing market demand for Rosemary, expanding the range of natural preservatives with the addition of antimicrobials and developing disruptive innovations.

This same approach will be applied to the Natural Colours and Phytoactives categories.

For the 2017 second half, the Group remains fully focused on executing its roadmap for a gradual return to organic growth based on the Bright2020 strategic plan's three engines: innovation & science, consumer focus and emerging markets.

You can receive all financial information of Naturex free of charge by signing up at: www.naturex.fr

  • Availability of the 2017 interim financial report

The 2017 interim financial report including the management report, information on the main related party transactions, the main risks and uncertainties for the remaining six months, as well as the outlook, the interim consolidated financial statements and notes thereto and the Statutory Auditors' report was filed with the AMF on 13 September 2017 (after the close of trading). This report was presented to the Audit Committee on 7 September 2017 and approved by the meeting of the Company's Board of Directors on 12 September 2017. It is available in electronic form from the website of Naturex while hard copy versions of this document may be obtained from the Company at no charge.

  • SFAF analysts meeting of 14 September 2017

Naturex will present its 2017 interim consolidated results at the analysts meeting (SFAF - French Society of Financial Analysts) of 14 September 2017 at 10 a.m. (admissions as from 9:30 a.m.) at the offices of Orrick, 31 Avenue Pierre 1er de Serbie, 75016 Paris.). A webcast of the presentation will be available live and by retransmission from the following links:



Analysts meeting (SFAF - French Society of Financial Analysts) of 14 September 2017 at 10:00 a.m.

  • Access to the webcast from a computer

To access the live or replay version of this webcast from a computer, click on:

  • Access to the webcast from a mobile device - QR code

To access the live or replay version of this webcast from mobile phones or tablet devices using iOS and android operating systems:

  • Financial schedule
 - Third-quarter financial information 14 November 2017
  • Upcoming events
 - Analysts meeting (SFAF - French Society of Financial Analysts), Paris 14 September 2017
 - US Investor Day (New Jersey, United States) 3 October 2017

About Naturex

Naturex sources, manufactures and markets natural speciality ingredients for the food, health and cosmetic industries. As the Natural Maker, the company actively supports the global shift from synthetic to natural through an offer built on two main focus areas: My Natural Food and My Natural Selfcare. Naturex's portfolio includes colours, antioxidants, speciality fruits & vegetables, phytoactives, and numerous other plant-based natural ingredients, designed to create healthy, authentic and effective products.

The Group's strong commitment to quality, sustainability, continuous innovation process, and the talent of its people are at the heart of its success.

Headquartered in Avignon, France, Naturex has experienced steadily-increasing growth throughout the last 25 years. The Group employs 1,700 people worldwide and in 2016 had revenue of €404.4 million.

The Group is listed on Euronext Paris, Compartment B - Index: Euronext Next 150, Enternext CAC PEA-pme 150, CAC Small & Mid, CAC Small, Gaïa - Ticker: NRX - Reuters: NATU.PA - Bloomberg: NRX:FP - DR SYMBOL: NTUXY

 NATUREX, From Nature to You

  • Contacts
Carole Alexandre
Investor Relations
Tel.: +33 (0)4 90 23 78 28
Anne Catherine Bonjour
Actus Finance Press Relations
Tel.: +33 (0)1 53 67 36 93

1 Refer to the enclosed income statement presented by function of expense. The interim financial report including the consolidated financial statements and the notes thereto as well as the management report for the six-month period ending 30 June 2017 is available at the Company's website www.naturex.com, in the section Finance > Documents and publications.

2 The holdings of Chile Botanics' minority shareholders represented a stake of 49%.

3 The press release on first half revenue was published on 31 July 2017.

4 A €3.4 million currency effect (positive for USD and AUD, negative for GBP)

5 Strategic product categories identified through the Bright2020 strategic plan: Natural colours, natural antioxidants, fruit and vegetable-based ingredients, and phytoactives.

6 To better reflect the annual performance without the impact of inventory management measures that were not generated over the period, Naturex adopted a new alternative performance indicator. The destruction of stock and inventory provisions of more than two years are now restated in EBITDA under the term of recurring operational EBITDA. The previously used indicator of Recurring EBITDA took into account only the restatement of amortisation, depreciation and impairment, whether for tangible or intangible fixed assets.

7 For information, the effective tax rate for the Group over the reporting period was 27% compared to 36% in the 2016 first half. The 2016 first half tax expense was impacted by the non-recognition of deferred tax assets, located mainly in France.

8 The Inventory-to-Sales ratio based on sales over a rolling 12-month period excluding Toll Manufacturing. Positive currency effect of two points or a 42.5% of sales based on the exchange rate of 31 December 2016.

9 Defined as Net Financial Debt / Recurring operating EBITDA over a rolling 12-month period.

10 Net financial debt / equity

11 Natural colours, natural antioxidants, fruit and vegetable-based ingredients, and phytoactives.

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