Wessanen wellness strategy strong in Europe
its Tree of Life Europe unit, with sales up 22 per cent in the
third quarter. Economic conditions are still affecting US sales,
however, although the company says measures have been taken to
counter the impact.
Dutch natural foods group Wessanen reported EBITA for current activities in this year's third quarter increased 29 per cent to €18.7 million (up from €14.5 million in 2001).
While net sales from current activities decreased 3 per cent to €678.2 million (€701.8 million in 2001), sales at Tree of Life Europe grew 22 per cent to €101.1 million (€83.1 million in 2001), with 4 per cent organic growth.
Sales in the United States were disappointing, said the company, with natural foods up 13 per cent to €118.2 million, but sales of speciality food down 4 per cent to €261.4 million.
Increasing sales at Tree of Life Europe were attributed to 'more effective marketing and strong brand development'. The Bjorg and Gayelord Hauser brands continued to perform well. New acquisitions Kallo Foods and Nature's Store also had a good impact on results, as did the cross-selling of various brands and products in the group, such as German brand Tartex, now also sold on the French market.
Constant pressure from adverse economic conditions was blamed for disappointing sales in the US retail sector. Wessanen said it had carried out organisational changes following the partnership with Wild Oats and introduced more flexible pricing and a lower cost structure. Overhead costs are being reduced and more than two hundred jobs have been shed. A review of the IT system is expected to result in an exceptional charge of around €20-25 million (before taxes).
The company also said it expects extraordinary income of about €100 million due to the sale of Leerdammer Company to Fromageries Bel in June and an exceptional charge of €30 million due to the partial write-off of the IT system and reorganisation of the UK cereals unit.
Mac Zondervan, chairman, said the results confirmed the success of the strategy, which focuses on consumer demand for healthy, tasty and convenient food.
"This market continues to grow. This is reflected in growth of 22 per cent in the third quarter at Tree of Life Europe, including 4 per cent autonomous growth, and the progress made by our strong brands in Europe. Although the sales and results in the United States as a whole were disappointing, even here we saw our sales in natural foods rise by 13 per cent. That the Wellness consumer cares about convenience as well as health was evident from the strong performance of the Convenience Food Group of which the result (EBITA) increased no less than 17 per cent."
He added that sales at Wild Oats were surpassing expectations and more than two hundred jobs have been shed to reduce costs.
The 2002 and 2003 outlook remains at the levels stated with the half-year results in August. Net sales for the last quarter of 2002 are expected to be in line with the same quarter last year for the current activities.
Besides lower results at the cereals unit, the results of Tree of Life North America will be considerably less than the same period last year. This is expected to be only partly offset by better results at Tree Of Life Europe, the consumer foods group and the European dairy unit.
