Consolidated sales for the first nine months of 2016 totaled €2,180 million, flat versus the same period ended September 30, 2015.
The acquisition of Safilait, which took place on September 1, 2015, positively impacted sales in the first nine months to the tune of €58 million, or 2.7%, while foreign exchange fluctuations negatively impacted sales by 1.4%. Excluding those items, sales contracted 1.3% organically in the first nine months of 2016.
Third-quarter 2016 sales came to €731 million, in line with the performance reported in Q3 2015. At constant exchange rates and scope of consolidation, sales declined 1.3% organically for the quarter.
By geographical region, the sales trend was as follows:
European markets reported a slight increase in sales volumes, driven by the strong positioning of the Group’s core brands. However, against a backdrop of fierce competition and a decline in dairy raw material prices, promotional activities were beefed up, and the foreign exchange impact deteriorated further in Q3 2016.
In the Middle East and Greater Africa, a region beset by numerous wars and sharp price swings in petroleum-based products, sales growth stalled following a strong first-half performance. The consolidation of Safilait accounted for the lion’s share of the region’s sales growth in Q3.
Sales in the Americas, Asia-Pacific region continued to expand at hefty pace in Q3, confirming the growth trend observed since the beginning of the year.
Outlook for 2016
Market conditions remain tough, with a lackluster economic environment, particularly in Europe, and a very uncertain geopolitical context in the markets of the Middle East, Greater Africa region, where operations management is increasingly complex.
The Group’s earnings visibility is clouded by the rebound in dairy raw material prices and high volatility in currency rates and financial markets. Nevertheless, continuing to pursue its aggressive strategy, the Group remains confident in its ability to defend and advance its positions around the world by building on the vitality of its brands, the strength of its innovation policy and the talent of its teams.
On October 20, 2016, the Bel Group and the MOM Group’s management team signed an agreement with LBO France to acquire the MOM Group. Under the agreement, Bel will become MOM’s majority shareholder with 65% of ordinary shares, while MOM’s management, which has led the development of the MOM Group, will hold the remaining 35%. The transaction will enable Bel to create a major global player in the healthy snacks segment.
Following exclusive talks entered into on July 29, Bel and MOM won unanimous approval for the planned transaction from the labor-representation bodies of both companies. The US competition authorities approved the deal, and its completion remains subject to the approval of French competition authorities, which is expected to rule by the end of the year.
The deal values the MOM Group at €850 million. Including transaction and debt refinancing costs, total investment is around €800 million for Bel. It will be financed by Bel’s own financial resources and supported by raising additional financing totaling an equivalent of €490 million. A liquidity agreement will allow Bel to acquire 100% of MOM’s share capital by April 2022. The Bel Group’s financial position will remain strong upon completion of the operation.
This press release may contain forward-looking statements. Such trend and/or target information should in no way be regarded as earnings forecast data or performance indicators of any kind. This information is by nature subject to risks and uncertainties that may be beyond the Company’s control. A detailed description of these risks and uncertainties is provided in the Company’s Registration Document, available at (www.groupe-bel.com). More comprehensive information about the Bel Group can be found in the “Regulatory Information” section of the www.groupe-bel.com website.