Half-year report Aarhus United A/S

Transcription

1 Direct line: Fax: Half-year report 2003 Aarhus United A/S CVR no Announcement no. 20/2003 to the Copenhagen Stock Exchange Further information can be obtained from: Erik Højsholt, Group CFO Esben Vibe, Group CFO Telephone: Telephone: Mobile phone: Mobile phone: The announcement is available at Aarhus United s home page: Requests for a copy can be directed to investor@aarhusunited.com Visit the Aarhus United Investor Relations section at the address: Translation into English in case of variations, the original version in Danish will apply. Aarhus United A/S M. P. Bruuns Gade 27 DK-8000 Aarhus C Denmark Tel.: Fax: Telex: palmf dk dk.info@aarhusunited.com CVR no

2 Half-year report 2003 On Monday 25 August 2003, the Board of Directors of Aarhus United A/S considered and approved the accounts for the second quarter of Highlights For the first six months of 2003, consolidated post-tax profits amounted to DKK 12 million, compared with DKK 48 million for the same period in At the associate Maritex AS in Norway (44 % ownership share) sales declined during the first half of 2003 and commissioning problems occurred in connection with the manufacturing of new products. As a result, Aarhus United has written down its ownership share by DKK 12 million to zero and set aside a bad debt provision of DKK 18 million, before tax a total loss of DKK 30 million as previously announced. The DKK 18 million provision is based on the condition that Maritex AS is carried on by new owners. On the contrary, provisions of further DKK million will be set aside. In the strategic focus area chocolate and other confectionery fats volumes sold and net margins improved over last year. Total bulk oil net margin declined by DKK 63 million relative to the same period last year. Of this decline, the amount of DKK 35 million is due to the lower exchange rates applied in translating the results into Danish kroner, whereas the remaining amount reflects a reduction in global bulk oil consumption due to the continued economic downturn Developments in the exchange rates applied in translating the results of foreign subsidiaries into Danish kroner exerted a negative effect on the result for the first six months of 2003 by DKK 5.4 million, compared with the first half of The development of new products at BSP Pharma is progressing according to schedule. Negotiations concerning a product for treatment of eczema are expected to be concluded with a future partner within the next six months. The first clinical test results in respect of the product for treatment of arthritis are expected to be available shortly. Based on the decline in bulk oil sales, the expected result for the year has been adjusted downwards. Consolidated pre-tax profits for 2003 are now expected to amount to DKK million, compared with the previously announced result of DKK million for the full year (announcement no. 13/2003). Consolidated post-tax profits and operating income are now expected to amount to DKK million and DKK million respectively a decline of DKK 20 million, relative to the previous announcement. The downward adjustment also reflects non-recurring expense of approximately DKK 7 million incurred in connection with the name change to Aarhus United A/S, which was approved at today s extraordinary general meeting. Part of this amount is attributable to expenses paid earlier than scheduled. Expectations are based on the condition that Maritex AS is carried on by new owners. Page 2 of 10

3 Key figures and ratios for the group 1 st half year 2 nd quarter Full year DKK million Revenue 2,380 2,291 1,154 1,163 4,886 Net margin ,035 Operating profit, before depreciation (EBITDA) Operating income (EBIT) Pre-tax income from investments in subsidiaries and associates Net financing costs Profit on ordinary activities, before tax and minority interests Profit Total assets, end of period 3,300 3,398 3,300 3,398 3,383 Capital and reserves, end of period 1,283 1,388 1,283 1,388 1,424 Capital investments Depreciation Profit margin ratio 2.2 % 4.1 % 1.0 % 4.0 % 4.7 % Equity ratio 38.9 % 40.6 % 38.9 % 40.6 % 42.1 % Return on invested capital (ROIC) 4.7 % 8.5 % 2.2 % 8.4 % 10.5 % Average no. of shares (1,000 shares) 4,000 4,000 4,000 4,000 4,000 Market price, end of period Equity value per share Earnings per share Movements in capital and reserves: Capital and reserves as at 1 January 1,424 1,531 1,379 1,570 1,531 Profit Dividends for 2001 and Exchange adjustments in subsidiaries and associates Acquisition/allocation and dividend on treasury shares Adjustment of financial instruments Total movements Capital and reserves, end of period 1,283 1,388 1,283 1,388 1,424 The accounting policies remain unchanged, compared with the annual report for Page 3 of 10

4 Comments on the accounts for the period under review For the first six months of 2003, consolidated post-tax profits amounted to DKK 12 million, which was considerably below expectations for the period as well as the DKK 48 million profit for the first half of The decline was mainly due to the following three factors: 1) The DKK 30 million loss on the associate Maritex AS; 2) declining bulk oil sales and reduced net margins, following the global economic downturn; 3) the development in the exchange rates applied in translating the results of foreign subsidiaries into Danish kroner. Consolidated operating income amounted to DKK 51 million for the first half of 2003, compared with DKK 93 million for the same period last year a decline of DKK 42 million was mainly due to the circumstances described above. Pre-tax income from investments in subsidiaries and associates totalled DKK 14 million for the first six months of The result includes the markedly improved profit from the associate United Plantations Berhad in Malaysia and the writing down of Maritex AS in Norway. For the first half of 2003, consolidated financing costs amounted to DKK 36 million, compared with DKK 35 million in the same period last year. Compared with the beginning of the year, capital and reserves declined by DKK 141 million. The financial exchange rate adjustments as at 30 June 2003 relative to foreign subsidiaries and associates exerted a negative effect of DKK 98 million on capital and reserves due to the decline in values of US dollar (USD), British pound (GBP), Malaysian ringgit (MYR) and Mexican peso (MXN). As of 25 August 2003 the holding of treasury shares numbers 153,973 equivalent to 3.8 % of the share capital. As at 30 June 2003, the market value was DKK 16.0 million above cost. Comments on developments in the period under review During the first half of 2003, it became obvious that the associate Maritex AS in Norway would need significant investments to be able to meet new customer demands and legal requirements. As the Maritex products do not represent group core business, the company resolved not to contribute to the capital injection required by Maritex AS for these investments (see announcement no. 15/2003). The group will liquidate its commitment in the company. According to previous information, this will result in a total loss of DKK 30 million in the accounts for The loss has been charged to the income statement for the first six months of the year. The demand for bulk oils for the food industry declined during the first half of As a result, total bulk oil net margin fell DKK 34 million below the margin obtained in the same period last year. Half of the decline is attributable to lower exchange rates applied for the translation of net margins in foreign currencies into Danish kroner. In our belief, we have maintained our market share; it seems that the decline in bulk oil is exclusively due to the economic downturn. In fact, although the volume of orders was high during the first six months of 2003, customers were not able to take delivery on time. Page 4 of 10

5 Demand is expected to return to normal levels shortly, but with only four months of 2003 remaining, any positive effect therefrom is unlikely to impact materially on the negative influence caused by lower bulk oil offtake on the result for the full year. In the strategic focus area chocolate and confectionery fats sales and net margins developed according to expectations, with improvements in the volumes sold. Net margin in Danish kroner was on the same level as last year, but the development should be seen in the light of the declining exchange rates, which resulted in a reduced net margin in Danish kroner for the first half of 2003, compared with the first half of Total net margins on segments developed as follows: 1 st half year Full year DKK million Group production companies: Speciality fats Bulk oils Foodservice Health care Other areas Total net margin Other companies Total net margin ,035.2 The group s share of the profit from United Plantations Berhad for the first half of 2003 improved significantly over the same period last year and amounted to DKK 25 million, before tax, for the first six months of 2003, compared with DKK 17 million for the first half of Part of the improvement is due to higher palm oil prices and part of it is relative to the fact that as from the second quarter of 2003, the results from the UIE plantation acquired in the first half of 2003 were included in United Plantations Berhad s result; the positive effect of this is significant although Aarhus United s ownership share of United Plantations Berhad was reduced from 32 % to 24 % in connection with the take over of the UIE plantation. It should be noted that the lower exchange rate of Malaysian ringgit (MYR) caused a depreciation of approximately DKK 6 million in the group s proportion of profit. Page 5 of 10

6 Group companies Aarhus United Denmark 1 st half year 2 nd quarter Full year DKK million Revenue ,229.7 Net margin Operating income, before depreciation (EBITDA) Operating income (EBIT) Profit on ordinary activities, before tax Profit Capital investments Capital and reserves, end of period Total assets, end of period 1, , , , ,032.4 Profit margin ratio (%) 3.8 % 4.3 % 2.1 % 2.4 % 5.8 % Return on invested capital (%) 5.8 % 6.0 % 3.0 % 3.0 % 8.3 % Volumes sold (tonnes) 86,183 79,230 41,059 40, ,006 For the first half of 2003, Aarhus United Denmark recorded a pre-tax profit that was at the same level as in Improvement in net margin totalled just under DKK 10 million, which resulted from the strategic speciality fats area. In comparing with the post-tax profit for last year, it should be noted that in 2003, corporation tax of DKK 4.7 million has been set aside as the value of a tax asset was absorbed within the income for In Aarhus United Denmark, total net margins on segments developed as follows: 1 st half year Full year DKK million Speciality fats Bulk oils Health care Other areas Total net margin Page 6 of 10

7 Aarhus United UK Ltd. 1 st half year 2 nd quarter Full year DKK million Revenue ,893.4 Net margin Operating income, before depreciation (EBITDA) Operating income (EBIT) Profit on ordinary activities, before tax Profit Capital investments Capital and reserves, end of period Total assets, end of period Profit margin ratio (%) 3.0 % 4.0 % 3.8 % 4.5 % 4.5 % Return on invested capital (%) 7.6 % 11.3 % 10.1 % 14.0 % 13.0 % Volumes sold (tonnes) 157, ,634 82,372 85, ,794 For the second quarter of 2003, Aarhus United UK Ltd. recorded a profit, which improved significantly over the first quarter of The profit is in accordance with expectations but remained below the level of last year. The decline in the company s capital and reserves is due to the fact that Aarhus United UK Ltd. paid dividend to the parent company in the second quarter of In Aarhus United UK Ltd., total net margins on segments developed as follows: 1 st half year Full year DKK million Speciality fats Bulk oils Foodservice Health care Total net margin Foodservice net margin was affected by intensified price competition on the British market and supply problems due to the commissioning of a new plant. The decline in bulk oil net margin, compared with last year, is mainly due to a reduction in volumes sold, following the economic downturn. Page 7 of 10

8 Aarhus United USA Inc. 1 st half year 2 nd quarter Full year DKK million Revenue Net margin Operating income, before depreciation (EBITDA) Operating income (EBIT) Profit on ordinary activities, before tax Profit Capital investments Capital and reserves, end of period Total assets, end of period Profit margin ratio (%) 4.9 % 5.3 % 4.8 % 6.5 % 6.5 % Return on invested capital (%) 10.0 % 10.5 % 8.6 % 13.6 % 13.7 % Volumes sold (tonnes) 55,858 57,259 26,423 30, ,296 For the second quarter, Aarhus United USA Inc. recorded a profit, which exceeded expectations. The pre-tax result in terms of US dollars was in line with the previous year, but due to negative USD exchange rate developments, the pre-tax result is almost DKK 2 million below the result for the same period last year. The economic downturn in the USA also led to a decline in volumes sold during the first half of 2003 almost 1,500 tonnes below the volumes sold during the equivalent period in In Aarhus United USA Inc., total net margins on segments developed as follows: 1 st half year Full year DKK million Speciality fats Bulk oils Health care Other areas Total net margin Page 8 of 10

9 Aarhus United Mexico S.A. de C.V. 1 st half year 2 nd quarter Full year DKK million Revenue Net margin Operating income, before depreciation (EBITDA) Operating income (EBIT) Pre-tax profit on ordinary activities Profit on ordinary activities, before minorities Profit Capital investments Capital and reserves, end of period Aarhus United s proportion of capital, end of period Total assets, end of period Profit margin ratio (%) 2.6 % 5.4 % 2.2 % 4.6 % 5.5 % Return on invested capital (%) 4.4 % 8.8 % 1.8 % 4.0 % 9.9 % Volumes sold (tonnes) 54,778 62,808 26,916 31, ,695 In the second quarter, Aarhus United Mexico S.A. de C.V. again recorded a decline in volumes sold almost 15 % below the volumes sold during the second quarter of For the first six months, the figure was 13 % below the level for the same period in Due to the decline in volumes sold, the pre-tax result for the second quarter was negative at MXN -1.5 million. For the first half of 2003, the pre-tax result was MXN -2.2 million. In Aarhus United Mexico S.A. de C.V. total net margins on segments developed as follows: Half year Full year DKK million Speciality fats Bulk oils Total net margin Other subsidiaries performed as anticipated. Page 9 of 10

10 Associates Associate contributions amounted to DKK 14 million, before tax. This amount includes contributions from United Plantations Berhad in Malaysia and the write down of the investment in Maritex AS in Norway. By far the biggest proportion of the result derived from United Plantations Berhad, Malaysia, which recorded a post-tax profit of MYR 36.8 million (DKK 64.7 million) for the first half of 2003 an improvement of MYR 18.7 million (DKK 25.6 million) over the first half of Outlook for the full year As a result of the decline in bulk oil volumes sold, the expected profit for the full year is adjusted downwards. Consolidated pre-tax profits for 2003 are now expected to amount to DKK million, compared with DKK million as previously announced. Consolidated post-tax profits and operating income for the full year are now expected to amount to DKK million and DKK million respectively ie. DKK 20 million below the results previously announced (announcement no. 13/2003). The adjustment also reflects a non-recurring expense of approximately DKK 7 million in 2003 for the previously announced name change to Aarhus United A/S. Part of this amount is attributable to expenses paid earlier than scheduled. Earnings from the strategic focus areas chocolate and confectionery fats as well as the food service segment continue to improve. The expected decline in profits is mainly due to a decline in bulk oil net margins because of the reduced consumption, following the economic downturn. Expectations are based on a full year turnover at the same level as in 2002, ie. DKK 4.9 billion. The turnover, expressed in Danish kroner, will to a significant extent depend on the raw material price level and the rates of exchange. Kjeld Ranum Chairman Erik Højsholt Group CEO Encl.: Income statement, balance sheet and cash flow statement Page 10 of 10

11 1. halvår 2003 Financial statement Aarhus United A/S Half year 2003 Group income statement 1 January-30 June 1 January-31 December DKK million Revenue 2, , , ,810.6 Raw materials 1, , , ,391.6 Value added , ,419.0 Direct production costs Net margin , ,076.6 Indirect production costs Distribution costs Administrative costs Other operating income Provisions for bad debts, Maritex AS Operating income Pre-tax profits from investments in subsidiaries and associates Interest expenses, net Pre-tax profit on ordinary activities Tax on profits for the first half year Tax on profits from investments in subsidiaries and associates Profit on ordinary activities Minority shareholders proportion of the profit Profit for the first half year Side 1 af 3

12 1. halvår 2003 Financial statement Aarhus United A/S Half year 2003 Group balance sheet ASSETS June December June December DKK million Intangible assets Property, plant and equipment 1, , , ,322.0 Investments in associates Loans guaranteed by related parties 53, Other securities 7, Tax asset ,1 - - Total investments and other assets TOTAL NONCURRENT ASSETS 1, , , ,948.3 Total inventories , Trade receivables , Associates Other receivables Total receivables Listed securities Cash at bank and in hand TOTAL CURRENT ASSETS 1, , , ,9345 TOTAL ASSETS 3.299, , , ,8 LIABILITIES Capital and reserves 1, , , ,531.4 Minority shareholders Deferred tax/pension obligations Restructuring costs at Aarhus United UK Ltd Total provisions Long-term debt , ,146.8 Short-term bank loans and mortgage debt Trade payables Other payables Total current liabilities 1,084, ,050.6 TOTAL LIABILITIES 3, , , ,882.8 Side 2 af 3

13 1. Financial halvår 2003 statement Aarhus United A/S Half year 2003 Cash flow statement 30 June st half year Full year DKK million 2002 Cash flows from operating activities Operating income Depreciation Provisions for bad debts, Maritex AS 18 - Provisions for restructuring and pension obligations Decrease (Increase) in inventories Decrease (Increase) in receivables Increase (Decrease) in trade payables 1-95 Increase (Decrease) in hedging instruments value Interest income (expenses), net Dividends received Tax paid Net cash from operating activities Cash flow from investing activities Investments in intangible assets Investments in property, plant and equipment Investments in subsidiaries and other assets 1 10 Net cash used in investing activities Net cash flows from operating and investing activities Cash flows from financing activities etc. Increase (Decrease) in minority shareholders proportion of profits -1 - Increase (Decrease) in long-term loans Dividends to shareholders in parent company Treasury shares -1 5 Minority shareholders proportion of losses (profits) -1-3 Exchange adjustments Net cash provided by financing activities etc Net increase (decrease) in cash Net cash and cash equivalents at year start Net cash and cash equivalents at end of period Net cash and cash equivalents comprise listed securities and cash at bank and in hand less short-term bank loans and mortgage debt.. Side 3 af 3