Danish vegetable oils and speciality fats company Aarhus Oliefabrik this week reports a drop in consolidated operating income for the third quarter as intense price competition and the impact of global recession takes its toll.
Consolidated operating income amounted to DKr56.6 million (€7.6m) for the third quarter of 2002, compared with DKr83.2 million for the same period in 2001 - a decline of DKr26.6 million, of which the non-recurring income from the sale of shares in the Maritex subsidiary accounted for 20 million in 2001.
For the third quarter of 2002, consolidated post-tax profits amounted to DKr29.2 million and according to the company are in accordance with expectations. For the first three quarters of 2002, the post-tax consolidated profits reached DKr77.2 million, compared with DKr111.0 million in the same period in 2001.
For the first three quarters of 2002, consolidated turnover was largely at the same level as in the first three quarters of 2001 and reflects a decline in sales volumes within the whole group, compensated by higher raw material prices. Sales volumes declined at Anglia Oils in the UK and Aarhus Olie in Denmark, while volumes increased at Aarhus in the US and Santa Lucia in Mexico.
The decline in consolidated value added totalled DKr49 million for the first three quarters of 2002 relative to the same period in 2001. The decline was mainly due to the general decrease in sales volumes in the bulk oil segment.
Operating income declined from DKr208.7 million for the first three quarters of 2001 to DKr150.0 million for the same period in 2002. If the non-recurring income of DKr45 million is excluded, operating income declined by DKr13.7 million, compared with same period last year. The decline was primarily attributable to Aarhus Olie in Denmark, Anglia Oils in the UK and Santa Lucia in Mexico whereas operating income at Aarhus in the US improved over the last year.
The increase in global market prices for cocoa butter - the fat that Aarhus Olie's speciality products canreplace - rose to some extent during the third quarter of 2002. The company reports that as the sales contracts are usually of a long-term nature, the potential effect on Aarhus Olie's earnings will not be reflected until 6-12 months from now, at the earliest.
On a positive note, for the full year, consolidated post-tax profits are expected to amount to DKr140-160million, compared with DKr125-145 million indicated in previously by Aarhus. The upward adjustment reflects the value of the parent company tax asset, on the one hand, and reduced sales volumes and earnings from the bulk oil segment, on the other.