Parmalat posts profit as strategy takes shape

By Anthony Fletcher

- Last updated on GMT

Related tags Parmalat Debt Calisto tanzi Bank of america

Parmalat's profit before interest and tax rose 18.4 per cent in the
first two months of 2006 to € 45 million, with predictions that net
debt would remain stable over the year.

The result is a vindication of the leadership of Enrico Bondi, who took over as chief executive last year.

Since the Italian dairy giant was revealed to be up to its neck in fraud, with a whopping debt totalling over € 14 billion in December 2003, Bondi has worked to reconstruct the company and protect it from collapse.

The company said that profit was up on sales and as a result of a settlement from Morgan Stanley. Revenue from core businesses was € 613 million for the first two months of the year, 9 per cent ahead of the same period in 2005.

Group net financial debt was also reduced from € 369.3 million to € 541.9 million.

The company also announced yesterday that the protection from creditors available to the Parmalat Group in the US (under art. 304 of the American bankruptcy procedures) has been further extended until 2 June 2006.

Parmalat has pursued a strategy of recouping the lost billions from associated financial institutions since Bondi was appointed administrator by the Italian government towards the end of 2003.

The company has already sued banks JPMorgan Chase and Unicredito Italiano for their involvement in the sale of Parmalat bonds issued from 1997 through 2001, and it was recently announced that US auditors Deloitte & Touche and Grant Thornton International must defend themselves against a $10 billion lawsuit by Parmalat.

Last month, Kaplan also allowed Parmalat to pursue a related case against Bank of America.

Financial institutions have maintained that they were fooled by Parmalat's fraud. But Bondi's case was bolstered earlier this month when Parmalat's former chairman Calisto Tanzi said that financial institutions knew of the company's financial problems.

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