Numico lifts spirits with raised forecast

An upbeat Numico yesterday lifted its outlook for the year after showing good growth in its core baby food and clinical nutrition units in the third quarter and first nine months.

The Dutch group also reported sales increase (7.7 per cent) in US supplements retailer GNC during the third quarter, the first positive growth since the fourth quarter of 2001. Divestment of the unit to a New York-based investor group was approved by shareholders earlier this week and looks set to close by the year-end.

Growth in the baby and clinical units for the third quarter - combined net sales were up 9.3 per cent while EBITA climbed 18.3 per cent - seemed to confirm the group's strategy to focus on these segments.

Baby Food saw sales rise by 8.1 per cent in the third quarter, the highest growth over the last two years, with Russia, Turkey and Indonesia particularly strong markets. EBITA grew 16.2 per cent in the third quarter and 13 per cent in the first nine months, helped by changes in the geographic and product mix and stable cost levels, said Numico.

Clinical Nutrition continued its strong growth trend, increasing sales by 11.8 per cent and EBITA by 22.9 per cent in the third quarter. France, Germany and Italy were strong European markets, while outside Europe, the unit saw growth of 18 per cent.

The lighter Numico​, which sold off the last of its European supplements businesses last month (Sweden's Vitamex) has also launched a costcutting drive, called Project Focus. It is set to generate savings from early next year through streamlining its European baby food businesses.

"With this strong performance in the third quarter, we reaffirm that the new Numico can deliver the promised 2003 sales growth for our core divisions at the top-end of our indicated range of 5-7 per cent,"​ said CEO Jan Bennink. EBITA for the full year, to include GNC results, has been raised from €340-360 million to between €375 and €385 million.

The results represent a turning point in the heavily debted company's recent performance. For the first nine months of 2003 Numico's EBITA has fallen 15.6 per cent to €277 million before exceptionals. Sales are down 6.4 per cent to €2,516 million, attributed to reduced activities after a series of divestments.

But the group has reduced nine-month losses to €545 million from €1,414 a year ago. The $750 million earned in the sale of GNC will help soak up its huge debt, also benefiting from better cash flow and depreciation of the dollar.

Numico has also promised to strengthen shareholders' equity, in the negative by €480 million at the end of the first nine months, thanks to impairment charges related to the GNC sale. Future earnings should bring the equity back into the black in two to three years, said the company.