ORIOR Group reports solid first half of 2014

Leading Swiss food group ORIOR AG, which specializes in fresh convenience foods and meat refinement, saw volumes increase again in the first half of 2014, with revenues increasing by 1.9% to CHF 253.1 million. The EBITDA of CHF 22.3 million gives an EBITDA margin of 8.8%, down from 9.3% in the first half of 2013. Profit for the period came to CHF 10.6 million (first half of 2013: CHF 11.2 million). Results are down on the year because of raw materials prices, some of which are at record high levels. Despite strict cost management it was impossible to offset the entire impact of this. Prices for ORIOR's most important raw materials are expected to ease in the late autumn of 2014, which together with sales growth and newly launched products makes the company confident about the second half of the year.

ORIOR's Refinement Segment, with its Rapelli, Spiess and Möfag competence centres, and its Convenience Segment, with Fredag, Pastinella and Le Patron, both achieved higher sales and contributed to the group's growth in the first half of 2014. Thanks to the good positioning of our brands and systematic cultivation of existing and new sales channels, we were able to maintain our market shares and in some cases expand them still further.

ORIOR segments: good growth, pressure on margins

The Refinement Segment increased its revenues from CHF 150.1 million to CHF 154.3 million. The main growth drivers were Rapelli and Möfag. Spiess performed slightly below expectations. The high price of meat had a negative effect on results for the whole segment in the first six months. The EBITDA margin fell as a result, from 7.5% in the previous year to 6.0%. Because accruals that should have been made in inventory management in past years in the Refinement Segment had not been made, an adjustment had to be implemented with retrospective effect from 1 January 2013. This adjustment took the form of a restatement that reduces shareholders' equity by CHF 4.2 million.

Results at the Convenience Segment were also influenced by raw materials prices but still improved. Revenues went up from CHF 94.3 million to CHF 99.1 million while EBITDA increased year-on-year to CHF 14.4 million (first half of 2013: CHF 13.8 million). Growth was driven in particular by vegetarian specialities and the gluten and lactose-free pasta range launched in the previous year. In May 2014 ORIOR acquired the organic tofu specialist Noppa AG of Rüti (ZH). This addition has strengthened ORIOR's competence in the area of high quality, high taste vegetarian specialities. The acquisition will provide the impetus for new products and accelerate growth.

ORIOR's Corporate, Export and Logistics Segment posted a disappointing result for the first half year of 2014. The Segment recorded net sales of CHF 14.3 million compared with CHF 17.2 million in the first half of 2013. There was a double-digit percentage rise in exports of vegetarian specialities to Germany, but this was not enough to make up for the fall in sales of Bündnerfleisch in France. Alongside the difficult economic situation, payment difficulties at one of ORIOR's key distributors contributed to the fall in sales. ORIOR sold transport company Lineafresca in May 2014. The buyer was a longstanding transport partner, with which ORIOR will now be working even more closely as part of a strategic alliance. From now on, ORIOR concentrate on its core business of fresh convenience foods and refined meats.

Innovation and brand management

ORIOR continued to press ahead with innovations during the period under review and launched numerous new products. For example, in addition to its restaurant trade, Rapelli is now also supplying retail outlets with a complete range of fresh lasagne products. Following the success of jumbo fresh trays, Albert Spiess rounded out its range of packaged products with the introduction of mini fresh trays containing handy small portions of salami, raw ham and Bündnerfleisch. One of the new highlights for the barbecue season is the gourmet veggie BBQ platter from Nature Gourmet - a selection of high quality vegetarian products with no artificial ingredients or preservatives. Le Patron has also expanded its range to suit the season, launching a new generation of terrines called "Millefeuille".

Alongside the innovations ORIOR has also invested heavily in its brands. The "Albert Spiess" brand, which has been present in retail outlets across Switzerland since the start of the year, has performed very well. The Convenience Segment has also launched the new "Le Patron" brand for retail sales of premium convenience products such as pasta, sauces and pâtés, as well as of Fredag, Pastinella and Le Patron dishes.

ORIOR Group key figures - first half of 2014

Outlook

ORIOR expects revenues to keep rising in the second half of 2014. The gross margin should recover slightly. The construction of Rapelli's new picking centre is now complete and the first positive effects of this investment can be expected as of autumn 2014.