2013 3Q: Results note

Natraceutical closed the third quarter of 2013 with a net profit of 2.17 M€ compared with losses of 0.28 M€ in September 2012.

  • The turnover stood at 25.30 M€, an increase of 7.2% over the first nine months of 2012.
  • The recovery in sales, combined with Forté Pharma’s strong operating leverage, favored an increase in Natraceutical’s EBITDA of 88.8% up to 3.36 M€, compared to 1.78 M€ in the third quarter of 2012. The EBITDA margin rose from 7.5% to 13.3%.
  • Profit before taxes stood at 3.11 M€ compared with losses of 0.22 M€ at the end of September 2012.
  • The cancellation of the entire syndicated loan in December 2012 enabled the company to reduce the net figure between financial expenses and income from negative 3.08 M€ in September 2012 to positive 0.11 M€ in the same period of 2013.

1.- Business performance

As a result of the total divestment of the stake in Naturex in December 2012, as of January 2013 the financial statements of Natraceutical include only the results from Forté Pharma, one of the leading companies in Europe in the food supplements industry.

Following the sharp contraction of the weight control food supplements industry in France -Forté Pharma’s main market segment- between 2009 and 2012, the subsequent recovery of the market since the last quarter of 2012 is having a positive translation in the development of Natraceutical’s main business.

Natraceutical maintained this positive trend in the third stand quarter of 2013, with a sales growth of 6.1% and a year-to-date growth of 7.2%, up to 25.30 million euro.

The company is pushing the development of its health and energy ranges to balance its strong position in the weight control segment. This is the main reason why the first and third quarters are affected by the seasonality of weight control and health sales campaigns, respectively, while the second and fourth quarters contain the main advertising investment to support the pharmaceutical retailers’ sales to end consumers.

The efforts to develop a stronger offer in health resulted in a good performance of the business profitability in the third stand quarter (EBITDA +21.4% compared to July to September 2012), and Natraceutical closed the first nine months of the year with EBITDA of 3.36 million euro, compared to 1.78 million euro in September 2012, which represents a growth of 88.8% and an EBITDA margin evolution from 7.5% to 13.3%.

Operating performance of Natraceutical 2012-2013
(in million euro)

By product categories

In the first nine months of the year, the slimming range decreased its contribution in the total sales from 65.6% to 63.0%, in favor of the health, energy and beauty ranges, which the company is pushing hard to achieve a better balance in its product portfolio.

The weight control range achieved 3.1% growth in the first nine months of the year, while the health and energy ranges increased revenues by 6.6%, contributing 23.3% of the company turnover. The beauty range accumulated growth of 32.7% in the first nine months of the year and represented 13.6% of total sales.

In accordance with this strategy, the company launched this year three new products in its weight control range and four in the health and energy ranges, which have been complemented with a bio range. Among others in the health and energy ranges are Vitalité 4G Défenses, to increase energy and body’s natural defenses and Protectan Cholestérol, to regulate cholesterol levels in a natural way, to fight against oxidative stress and regulate fat metabolism.

As for the beauty range, Expert Hialurónico, developed in 2012, was followed this year by Expert Keratina, a hair product with bioactive keratin to restore strength and hair quality and exalt its brightness and color.

By markets

By geographic markets, France, which at the end of September brought together 63.6% of the company turnover, resubmitted a sales growth in the months of July to September, after a contraction in the second quarter due to the effect of adverse weather during the pre-campaign of the weight control range. All in all, this market accumulated a growth in turnover of 2.4% in the first nine months of the year.

The whole of the remaining markets presented a new quarter of growth, with a cumulative increase in turnover in the first nine months of the year of 10.5%

Spain continued to be the driver of this growth, with sales increasing 83.6% in the third stand quarter and 84.1% in the first nine months, and it consolidated as the company’s second largest market, with a 16.4% of turnover.

Among the secondary markets, United Kingdom maintained its fourth place in the geographical diversification of Forté Pharma, following Benelux. Although the evolution of this market is not significant in the third stand quarter because Forté Pharma focused its first stage of development in this country through the weight control range, with sales mainly in the first half of the year, UK accumulated growth of 25.7% in September and 1.9% of total business sales.

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