Wessanen:US market under pressure

Related tags Food and drink Marketing

Dutch food company Wessanen reported sales of €1,449.5 million for
the first half of 2002. Net sales remained close to figures for
last year's first half, while EBITA decreased to €36.6 million from
€43.2 million in the same period a year ago.

Dutch food company Wessanen reported sales of €1,449.5 million for the first half of 2002. Net sales remained close to figures for last year's first half, while EBITA decreased to €36.6 million from €43.2 million in the same period a year ago.

European activities through Tree of Life Europe produced satisfying results, although US operations were disappointing, said the company.

Mac Zondervan, chairman of the executive board, said: "As we announced in February, the results for the first half-year have been clearly influenced by the divestment of our US dairy companies, GFI, and our participation in Campari.

I am generally satisfied with regard to our European activities. The growth of our strong natural food brands, in particular, shows that we are operating with the right brands in the right market. In the US, however, the situation is different. Here we are under pressure. The continuing economic recession is…causing loss of sales and pressure on profit margins."

Though the sales of natural foods in the US increased by 4 per cent, autonomous sales decreased by 5 per cent. This was caused primarily by the pressure on the speciality food sales in the supermarket channel, said Zondervan. He added that the current reorganisation process will be intensified to deal with the US market.

The company said it was maintaining expectations for further growth in the European core operations in 2002. However, after recent terminations of speciality food sales agreements, which will become effective in the second half of 2002, and disappointing July results at Tree of Life North America, the outlook for US business has altered.

Wessanen added that further integration at Tree of Life Europe, specific profit improvement plans for Cereals and new sales through Wild Oats, meant that outlook for 2003 was positive.

In the first half-year of 2002 the combined sales of the Natural and Specialty Foods companies reached €1,112.3 million, more or less equal to the figure for the first half of 2001, said Wessanen. The EBITA decreased by 2.4 per cent from €33.4 million in the first half of 2001 to €32.6 million in the first half of 2002.

Despite difficult market conditions, particularly in Germany, Tree of Life Europe sales increased by 24.1 per cent through acquisitions, against a negative autonomous growth of -1 per cent.

Wessanen said that the integration of the European natural and specialty foods operations acquired in 2000 and 2001, into a streamlined European wellness platform was proceeding according to plan. The UK distribution company, Nature's Store, acquired in March, has made a positive contribution to the operating results of Tree of Life Europe and the acquisition of Kallo Foods in July of this year is thought to further strengthen the company's position in the UK market.

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