Naturex reaps Natraceutical buy-out benefits to turn record profit

Bigger is defintely better for botanicals player Naturex as profits rise

Related tags Cent Mergers and acquisitions

French supplier Naturex is reaping the benefits of its December buy-out of the ingredients division of Spanish supplier Natraceutical with a record quarter net profit of €3.2m and €10.8m for the nine months to the end of September.

The botanicals giant had revenues of €170.6m for the nine month period, compared to €77.3 for the same nine months in 2009 but before the Natraceutical acquisition – an above-target growth figure.

Naturex confirmed new targets for 2010 including a 10 to 15 per cent increase in sales and a 2.5 to 3-point improvement in its operating margin on the proforma figure for 2009.

Under the acquisition deal, which offered completely new areas of operation for Naturex such as fruit and vegetable powders and pectin, Naturex is now 33.9 per cent owned by Natraceutical.

Euro strength

At the time of the acquisition, Naturex, which has about 90 per cent of its business outside of France, and 60 per cent in the US, said Natraceutical’s strength in the European food ingredients market and its broad portfolio of functional ingredients as well as flavourants and texturants, made it especially appealing.

“Natraceutical have a huge presence in Europe which we can benefit from and their broad range will boost our offerings globally,” Dikansky said. “They are very strong in natural colours and we have never been very strong in natural colours for instance. Their functional ingredients range of beta-glucans, caffeine, yeast, soluble fibres and more are all great complements to our range.”

The new entity has 60 per cent of its business in food and beverages; 30 per cent in food supplements and 10 per cent in pharma and cosmeceuticals, Dikansky said. Of that, 45 per cent is in Europe; 35 per cent in North Amrica and 20 per cent in Asia, latin America and Africa.

“We are now 30 or 40 per cent bigger than the next largest natural extracts supplier,” Dikansky told NutraIngredients.com this morning. ”This is important because you need to be bigger and bigger to meet clients’ increased needs. Customers are demanding more when it comes to research and development, clinical data, quality control, sales presence and you need to be large to deliver on this.”

He said while the merger was a significant one, it did not necessarily signal the end of acquisition activity.

Some of the 18-year-old company’s bigger deals include the incorporation of Pure World in 2005 and the ingredients division of Berkem in 2008, as well as smaller European and American acquisitions in between.