increase in prices olive oil Companies are starting to experience a decline in their results. Deoleo, manufacturer of brands such as Carbonell, Hojiblanca or Koipe, recorded a loss of 9.7 million euros in the first half of the year after experiencing a decrease in sales volume of up to 21.9% compared to the previous yearAs reported by the company itself in information submitted to the National Securities Exchange Commission. The group acknowledges that the rise in olive oil costs is affecting consumption and driving buyers to opt for private label products. The company’s shares fell 5% on the stock market this Monday. The group warns that olive oil costs will continue to rise in the coming months.
It markets brands such as Deoleo, Carbonell, Bertolli and Carapelli in 73 countries, with a turnover of 827 million in 2022, that is, 18 percent more turnover and a profit of 6 million. Market share in olive oil in Spain is 13.4%; 11.6% in Italy and 15.3% in Italy United States of America. “In 2023, Deoleo will face one of the most challenging periods in the industry’s recent history. In this context, it is focused on maintaining unit margins and continuing the roadmap of its strategy. […] In the face of constant increases in raw material prices in the context of inflation and increases in interest rates,” says the brand in a press release sent to the CNMV.
Oil prices have doubled in the last two years due to recurring droughts and heat waves. ANDThis resulted in a decline in olive oil sales volumes, which eroded the company’s margins.. “The increase in prices could not compensate for the decrease in sales, and this affected the company’s Ebitda (earnings before tax and depreciation), which was 12.7 million euros, which was 43% lower on an annual basis,” the company said, adding that debt costs had an impact of 8 million. The group’s turnover increased by 0.6% in value in the first half to 400.95 million, thanks to “partial transfer of the chain-wide price increase to customers”.
The complicated olive oil situation comes as the CVC fund is testing the sale of its shares in the company, although no definitive offer has yet been made. “Due to the complexity of events, we were faced with a historical context. Despite the challenges, we at Deoleo responded with agility and maintained our commitment to sustainability, quality and innovation. Our reference shareholders, CVC and Alchemy seems calm and satisfied with the development of the company and believes that the work carried out will return to results when the market returns to normal.“said Ignacio Silva, president and CEO of Deoleo.
There is no chance of recovery
Lack of rain and extreme heat resulted in reduced availability of Deoleo’s raw material, increasing the price of olive oil by more than 90%. “The increase in raw material prices also affected consumption, especially in developed markets. Spain and ItalyBoth experienced double-digit annual declines in consumption. “In the United States, where demand is very strong, the decline was almost non-existent at the end of the period,” the company notes.
Deoleo is aware that the industry will continue to face this situation, even more difficult, towards the end of the year. “latest prediction EU The current campaign’s olive oil harvest is expected to produce a global production of 2.5 million tonnes, which is 27% less than the previous campaign. and 24% lower than the average of the previous five campaigns. This decline is concentrated in European Union countries, where a 40% decline is estimated, while for the remaining producing countries the expected decline is 1%,” the group states in its concluding presentation note.
Source: Informacion
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