Numico sales propped up by new market growth

By Anita Awbi

- Last updated on GMT

Related tags Baby food

Dutch infant food and nutrition company Royal Numico has achieved
full-year double-digit growth for the first time, as strong sales
in Eastern European and Asian markets deflect rising costs.

The maker of Milupa baby food saw operating profits rise 11 per cent to €1.37bn, bolstered by strong international sales, but costs rose 27 per cent since 2004 as the company suffered rising commodities and fuel prices.

Overall the Nutricia Baby division saw full-year net sales growth of 11.7 per cent, as predicted by analysts, despite a nominal 3.8 per cent net sales rise in Western Europe. The company's newer Eastern European and Rest of World baby food markets saw net sales growth of 30.4 per cent and 17.8 per cent respectively, propping up the division.

Performance was driven by a rise in volume sales in these new markets and a series of price increases in key countries like the Netherlands, to match inflation and mounting commodity costs.

The company reported earnings before interest, tax, depreciation and amortisation margins (EBITA) was stable, as it reinvested money back into the business and worked to cut costs. But the EBITA forecast for the first half of 2006 is lower than the second half, the company warns, as it incorporates newly acquired businesses in China and Italy.

Total infant nutrition sales volume was impacted by December's product recall of a baby food line containing small glass particles in the seal of the jars, which cost the company €5mn. The one-off charge has not been included in the net sales percentage growth figure.

The year was marked by a string of acquisitions, as the division bought Dumex, a leading baby food business in Asia-Pacific, and Italian baby food firm Mellin. The company said the mergers will bring a year of growth, and increased profits from the acquisitions are expected in 2007.

"To improve our growth profile, we have started to roll out a promising innovation pipeline and made two important acquisitions in baby food which build our leadership positions,"​ said CEO Jan Bennick.

Net sales for Numico's smaller clinical nutrition operations grew 12.5 per cent to €180m, with organic growth driven by Southern Europe and the Rest of World.

And having sold the unprofitable American GNC nutrition centres in 2003, Numico nutrition is placed to continue achieving peak performance levels.

The firm, which makes British baby food brand Cow and Gate, also provides specialised nutrition for AIDS and cancer sufferers. It was rumoured to be a takeover target last year, but a string of acquisitions have since proved the company is following its own ambitious growth plan.

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