AMSTERDAM, THE NETHERLANDS — A plant closing in Kansas, lower input costs and customer consolidation all affected Corbion n.v. in the fiscal year’s first half, which saw a double-digit earnings increase.
EBITDA excluding one-off items increased 16% to €89.8 million ($100.4 million) from €77.3 million in the first half of the previous year, mostly driven by lower input costs, business mix improvements and a productivity improvement program called Streamline.
Closing a powder blending plant in Kansas in June brought about one-off costs of €2.3 million ($2.6 million), but it allowed Corbion to reach the Streamline (a restructuring program launched in 2014) target of cumulative annual savings of €20 million on a run-rate business. A one-off gain of €1.1 million related to a partial reversal of impairment of a loan for beet growers following the divestment of CSM Sugar in 2007.
Net sales of €455.7 million ($509.3 million) were up 0.8% from €452.3 million in the first half of the previous year. The increase came about due to positive impacts of 1.5 percentage points in organic growth and 0.3 point for the acquisition of Archer Daniels Midland Co.’s lactic acid business. Currencies had a negative impact of 1 point. Sales volume slipped by 0.2%.
|Tjerk de Ruiter, c.e.o. of Corbion|
“We can look back on a good first half of the year and are on track to deliver our disciplined value creation strategy 2015-18 targets,” said Tjerk de Ruiter, chief executive officer of Amsterdam-based Corbion, when results were given Aug. 10. “Our profitability, margin, and ROCE (return on capital employed) all increased substantially, driven by a combination of business mix improvements and lower input costs.”
In Biobased Ingredients, EBITDA excluding one-off items was €92.1 million in the first half, up 15% from €80.1 million. Sales of €444.5 million were down 0.2% from €445.2 million.
Within Biobased Ingredients, the food business segment had EBITDA excluding one-off items of €72.6 million, up 12% from €65.1 million. Net sales slipped 0.6% to €336.8 million from €338.7 million. Sales results in the food segment were below the multi-year guidance range of 1% to 3%. Organically, sales slipped by 2.7% in the second quarter.
“As part of our strategy execution, we are in the process of improving the portfolio profitability,” Corbion said. “As consequence, Q2 saw a positive price/mix shift toward higher value-add products/customers, but also lower volumes. Customer consolidation in the U.S. put additional pressure on volume growth rates in the food segment.
“Our sales in bakery decreased slightly in H1 in a stable bread bakery market. To reduce the complexity in our organization, in parallel with the closure of our Kansas facility, we decreased the number of s.k.u.s (stock-keeping units) and smaller customers, resulting in some adverse volume effects.”
Meat sales declined slightly, driven by an increased competitiveness in more commoditized parts of the market in the United States, mainly caused by increased customer consolidation.
“This trend is negatively affecting our volumes but also positively impacting our margins,” Corbion said.
In biochemicals, EBITDA excluding one-off items was €28.4 million, up 21% from €23.4 million in the first half of the previous year. Net sales of €107.7 million were up 1% from €106.5 million. Sales growth in the first half was below the guidance range of 5% to 8% although sales recovered in the second quarter.Biobased Innovations, excluding one-off items, in the first half recorded a loss before interest, taxes, depreciation and amortization of €2.3 million, which compared with a loss of €2.8 million in the same time period of the previous year. Net sales of €11.2 million were up 58% from €7.1 million due to lactide/PLA-related volume growth.