Parmalat rides high on strong Aussie results

Posted by Nicole Eckersley on 18th November 2010

Parmalat today approved its third 2010 Interim Report on Operations, reporting a net increase in revenues of 9.5%, to 3117 million euros, citing strong performance in Australia and Canada, thanks in part to the consolidation of the Parmalat Food Products operations, including former National Foods asset FreshCo, acquired in July 2009.

The company was also assisted by the devalued euro, compared to the strong currencies in many of its operating countries.

While the result was positive, it wasn’t plain sailing for the dairy giant; decreased sales volumes, mainly in Venezuela, lower unit sales in Italy and a pruning of the company’s South African product range reduced the impact of the positive changes.

Australian operations for Parmalat earned it cumulative revenues of 524.3 million euros and EBITDA of 46.0 million, including net revenues of 140.2 million euros and EBITDA of 4.8 million euros relating to its FreshCo acquisition in Q3 of 2009.

In Australian dollars, this translates to consolidated net revenues (Parmalat Australia and Parmalat Food Products) growth to $796.1 million, up from $621.3 million in the first nine months of 2009 (+23.8%). EBITDA increased to $67.4 million, or $12.3 million more than in 2009.

Parmalat said the integration of PFP produced a significant increase in sales, helping the Australian subsidiary consolidated its position as a national player, and cited a decrease in the cost of raw milk, as well as positive results for high-margin products such as flavoured milk (a portfolio including Breaka, Ice Break, Paul’s Iced Coffee and Rush) and yoghurt as the primary reasons for the EBITDA improvement in the first nine months of 2010.

In the pasteurized milk market, even though private labels have been steadily increasing their market share, Parmalat said it had strengthened its position by expanding its distribution network into territories where it did not operate before, and gave credit to a strong performance by some of its products.

Parmalat acquired the FreshCo fresh milk business, based in Lidcombe and Clarence Gardens in NSW and SA, from National Foods in 2009. National Foods was required to divest itself of assets by the ACCC, as part of its acquisition of Dairy Farmers, and was estimated by Parmalat at the time of purchase to have a combined revenue of approximately A$200 million to June 2008.

Parmalat operates in Australia mostly under the Pauls label, as well as a variety of other white milk brands such as PhysiCAL, Pure Organic and Rev. The company also produces Vaalia yoghurt and Soy Life soy products.