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Naturex Q1 Sales Down 2.1% On Tough Comparisons

Posted: April 28, 2014

Naturex's first-quarter sales were €79.6 million, declining 2.1% at constant exchange rates, as it faced tough comparisons with a year ago which included strong Svetol extraction and krill extraction sales for AKER BioMarine.

First-quarter food and beverage sales rose 5.4%, or 7.9% at constant exchange rates. Nutrition and health was up 1.2%, or 3.7% at constant exchange rates and personal care rose 6.1%, or 6.5%, at constant exchange rates.

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  • Organic growth at a good level (restated basis)
  • Renewed momentum for Food & Beverage
  • Strong growth in emerging countries despite currency effects

2013 was marked by strong sales from Svetol in the 1st half in response to extensive media coverage and Toll Manufacturing sales including krill extraction sales for AKER BioMarine that were very robust in the 1st quarter. The major portion of krill extraction activity for AKER BioMarine, recognized under Toll Manufacturing will be transferred outside the reporting scope for revenue starting in the 2014 second half, in light of the commencement of operations of the joint venture created with AKER BioMarine.

As announced with the release of 2013 annual results, the quarterly sales breakdown for 2014 will differ significantly from 2013, resulting in an unfavorable effect at the start of the year. 2014 first-quarter sales came to €79.6 million, declining 2.1% at constant exchange rates, due mainly to an unfavorable comparison base, amplified by exceptional performances in the 2013 1st quarter for Svetol extraction and krill extraction sales for AKER BioMarine. To this was added, a negative currency effect of 2.2% in the period reflecting the persistence of particularly adverse exchange rate trends not only for the U.S. dollar but also most emerging country currencies.

Restated to adjust for Svetol and krill extraction sales, quarterly revenue achieved organic growth of 6.2% at constant exchange rates despite a difficult macroeconomic environment: Food & Beverage registered a strong resurgence in growth, not only compared with the 2013 first quarter but also on a consecutive quarterly basis for 2013 full-year; All regions, excluding Svetol and krill extraction sales, showed positive growth trends, highlighting renewed momentum for Food & Beverage in Europe; Growth is continuing in emerging countries at an active pace (+10.2%). Efforts over the last 18 months in the areas of Group restructuring, organizational improvements and commercial execution are starting to produce results. Proximity to our customers enables us to be more actively involved to their projects for developing new products.

Food & Beverage showed good growth momentum for the main product ranges, benefiting from a more structured organization and commercial approach combined with improvements and underlying market trends.

Nutrition & Health posted revenue growth of 3.7% at constant exchange rates and restated to eliminate Svetol sales, confirming the solid base for our range of plant extracts and bolstered by the recent launches of innovative extracts with proven clinical benefits (Glucevia, Flowens) ; Personal Care revenue was up 6.5% at constant exchange rates. Boosted by an enhanced portfolio of botanical oils (NAT oleis range) and special concept collections ("Magic of Africa" and "Super Flowers"), this activity will generate significant growth over the full year.

For Toll Manufacturing, in light of the capacity freed up from the transfer in progress of krill extraction operations to the joint venture with AKER BioMarine, interesting development projects are currently under study. With its combination of scientific support, a polyvalent industrial base and expertise in the extraction and purification of innovative active ingredients, Naturex occupies a key position in this sector.

Trends for the Europe/Africa region were positive, with 3.1% growth at constant exchange rates (excluding krill extraction), pointing to renewed momentum in certain Western European countries, supported by a more targeted commercial approach; The Americas registered a 10.7% rise in sales at constant exchange rates (excluding Svetol sales), confirming the U.S. market's positive contribution, driven in particular by the development of a regional sales force; sales growth is also continuing in Latin America sales despite unfavorable currency effects in selected countries including Brazil.

The Asia/Pacific region has benefited from the ramping up of sales offices opened over recent years (China, South Korea, Dubai, Thailand, India) and accounting for 61.7% of the region's sales for the quarter at constant exchange rates. Sales in Australia have remained volatile in the historic segment for the distribution of ingredients. Over the period, all emerging countries accounted for 17.5% of Group sales, up from 15.6% from last year's first quarter.

"Organic growth in the 2014 first quarter, excluding Svetol and krill extraction sales, underscores a very encouraging trend confirming that we are on the right track. Signs of renewed momentum in all our markets and geographic regions provide grounds for optimism for the upcoming quarters and new projects will gradually contribute to sales growth over the period" commented Naturex's Chairman-CEO, Thierry Lambert. "Restructuring measures over the last 18 months combined with internal organizational adjustments to operating departments are starting to produce benefits. On that basis, we can now explore with confidence potential acquisitions for generating additional growth and creating value."