SOURCE: Royal Numico NV

May 02, 2007 01:50 ET

Numico: Good Start to the Year - Excellent Performance by Clinical Outlook Reconfirmed

SCHIPHOL AIRPORT, NETHERLANDS -- (MARKET WIRE) -- May 2, 2007 --


Financial Highlights First Quarter 2007 (on a comparable basis) [1]

For the full version of this release, including all the tables, please click on this link.

http://hugin.info/130673/R/1123286/207487.pdf

* Total sales up 9.6%; EBITA margin at 18.9%

* Baby Food sales up 8.0%; EBITA margin at 18.8%

* Clinical Nutrition sales up 14.1%; EBITA margin at 26.2%

* Normalised profit for the period up 18.1% and basic EPS up 16.7% (at reported rates)[2]

* Reconfirmed outlook of 10 - 12% organic sales growth and EBITA margin up 10 - 20 bps

CEO Statement

"Numico's first quarter 2007 sales growth of 9.6% continues a consistent record of positive performance across our Baby Food and Clinical Nutrition Divisions.

The Baby Food division grew by 8.0% in Q1 2007, against record- high sales growth comparables of Q1 2006. Eastern Europe continues to perform well, as does Asia-Pacific. The underlying trend for Western Europe is encouraging, with good performances in key growth markets and French market recovery completed by Q3 2007.

Clinical Nutrition achieved excellent sales growth of 14.1%, reflecting the recovery of the German market coupled with strong overall performance. Nutricia Clinical is also making important progress in the development of a nutritional product for patients with HIV. This product has entered phase III trials, which are expected to be completed by the end of 2010.

We will continue to review and respond to the steep material price increases in the dairy arena. Based on current assessments of future price developments in our raw material portfolio, we intend to offset raw material price upcharges through price increases and additional cost savings programmes. Consequently, we feel confident to reconfirm total sales growth of between 10% - 12% in 2007, with EBITA margin improvement of between 10 and 20 bps."

OUTLOOK 2006

Based on the strong potential of the markets in which Numico operates, the company reconfirms that it expects total sales to grow organically between 10 - 12% and the EBITA margin to improve between 10 and 20 bps in 2007. The outlook reflects the current expectations on the impact of raw material price developments.

As indicated at the start of 2007, Numico's performance in the second half of 2007 will be impacted by the sharp rise in certain milk and milk-related ingredients, which primarily impacts the Baby Food division. Numico intends to offset the rise in raw material prices through price increases and additional cost savings programmes.

These targets are all based on constant scope of consolidation, constant exchange rates, excluding exceptionals and barring unforeseen circumstances.

FINANCIAL REVIEW (on a comparable basis[3])

First Quarter 2007

Reported sales increased 6.5% to EUR 674 mln in the first quarter of 2007. This growth consisted of 9.6% organic growth, driven by 8.0% organic growth in Baby Food and 14.1% in Clinical Nutrition. Change in business scope and currency translation effects negatively impacted reported growth by (1.3)% and (1.8)%, respectively.

Numico's total EBITA margin remained stable at 18.9% compared to the first quarter of 2006, despite an increase in A&P and R&D spend of 17% and 14%, respectively.

Normalised profit for the period and normalised earnings per share amounted to EUR 74 mln and EUR 0.39, up 18.1% and 16.7%, respectively.

REVIEW BY ACTIVITY (on a comparable basis[3])

Baby Food

Baby Food sales increased 8.0% to EUR 485 mln in the first quarter of 2007. This performance was mainly driven by Eastern Europe and good performance in Asia Pacific. The underlying trend for Western Europe is encouraging with good performances in our key growth markets and French market recovery will be completed by Q3 2007.

The EBITA margin was 18.8% or only 20 bps lower than the very strong margin performance of the Baby Food division in the first quarter of 2006 and despite a strong increase in A&P spend.

Clinical Nutrition

Sales in Clinical Nutrition grew by 14.1% to EUR 184 mln in the first quarter of 2007. This growth reflects the recovery of the German market as well as a strong performance across Europe, most notably in the UK, France, Spain and the Nordics. The markets outside Europe also performed very well with particularly strong performances in Turkey and Brazil. All product categories contributed to this result with strong growth coming from certain key disease specific areas such as GI Allergy. The EBITA margin was 26.2%.

UPDATE ON HIV/AIDS PROJECT

Numico is continuing its development of a proprietary nutritional product for individuals with HIV who are not yet on pharmaceutical therapy (so called "pre-HAART" patients). The product is designed as Food for Special Medical Purposes (FSMP) in Europe and as Medical Food in the US. The HIV nutritional product is aimed to slow down the decline in health status - including the number of CD4 blood cells - of pre-HAART patients. The product consists of a combination of nutritional modules targeted at improving gut health, gut permeability and the immunological status of HIV patients. An international Advisory Board of key opinion leaders and experts in the HIV field has endorsed both the potential of the product and the set-up of the trials programme.

Clinical trials with HIV patients to date have confirmed the safety and tolerance of the individual nutritional modules and preliminary results on gut health and immune status are encouraging. Based on these results, we have moved into a multi-centre, multi- country, phase III clinical trial with pre-HAART HIV patients. The trial is expected to include up to 1,000 patients in 8 - 10 countries and is expected to be completed by the end of 2010.

OTHER FINANCIAL INFORMATION

Cash Flow

Total trade working capital as a percentage of sales improved 370bps to 8.6% compared to the first quarter of 2006. Capital expenditure amounted to EUR 42 mln, or 6% of sales in the first quarter of 2007.

Cash generated from operations was EUR 95 mln in the first quarter of 2007, driven by the strong increase in operating profit. Free cash flow at EUR (4) mln takes into account EUR 18 mln paid for shares of minority shareholders of Sari Husada, which has successfully received approval to delist from the Indonesian Stock Exchange.

Net Debt and Finance Costs

Net debt remained relatively constant at EUR 1,415 mln in the first quarter of 2007. Net finance costs amounted to EUR (20) mln in the first quarter of 2007 compared to EUR (28) mln in the first quarter of 2006, driven by lower interest expenses as result of ongoing deleveraging and less negative foreign exchange impacts. More information can be found in appendix 6.

Shareholders' Equity

Shareholders' equity improved by EUR 88 mln to EUR 957 mln in the first quarter of 2007. The improvement was mainly driven by retained earnings of EUR 74 mln. An overview of the movements in shareholders' equity can be found in appendix 4.

A live and on demand audio web cast of the conference call for analysts and investors will start at 10:00 hrs CET on Wednesday 2 May 2007. The related presentation slides will be available on our website (www.numico.com) at 7:30 hrs CET.

[1] 'Comparable basis' is at constant scope of consolidation and constant exchange rates and excluding exceptionals (please refer to appendix 5)

[2] 'Normalised' excludes discontinued businesses and exceptionals after tax (appendix 4)

[3] Based on constant scope of consolidation and constant exchange rates and excludes exceptionals (please refer to appendix 5)

For any questions you might have, please contact:

Royal Numico N.V. Corporate Communications
tel. +31 20 456 9077

Royal Numico N.V. Investor Relations
tel. +31 20 456 9003

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