The group reported a rise in sales to €444m (US$571m) in the first quarter of 2005, compared with €395m in the same period last year, meaning earnings before interest, tax and amortisation increased to €81m from €79m.
Numico said it was "pleased" with the results as the baby foods division reached its first quarter of double digit growth of 11.9 per cent and clinical nutrition experienced solid sales growth of 12.3 per cent.
The first quarter results were in line with expectations, though margins were lower at baby food unit due to restructuring costs, Oscar Poos at Fortis told Dow Jones.
"Those additional costs will disappear in the second half of this year and the company is well-positioned to meet its targets for '05," said Poos.
However, the financial news wire reported this morning that Kempen had downgraded Numico to neutral from add, saying the company has "no margin for underperformance on earnings growth in the coming quarters."
At the end of February, Numico acquired leading Italian baby food company Mellin from the Findim group for €400 million in cash and shares.
Indeed, since selling off its supplement activities, Numico has focused on its baby food and clinical nutrition businesses, looking to gain leading positions in certain markets for its baby food business through add-on acquisitions.
Its first acquisition was Valio's baby food business in May last year.
Goldman Sachs, at the time, forecast strong returns for Numico's new strategy, which eliminates much of the pricing pressure from retailers.
"Given that the clinical nutrition business has no exposure to the mass market retailers and that retailer brand has less than a 5 per cent share in the western European baby food market, we believe Numico is better placed than its peers to deliver growth despite…industry pressures [such as static consumer markets and consumers trading down]," said the analysts.