The company reported a net loss of HUF92million (€0.30m) after taxes in the quarter ending 31 March, compared to a profit of HUF 517 million in the corresponding quarter of 2003. The result came despite the fact that overall sales were buoyed by a 22 per cent increase in sales exports, leaving total sales for the quarter up 1 per cent to HUF 7.29 billion.
Export increases were helped by the company's exports to Russia and the Commonwealth of Independent States. In these markets more favourable exchange rates for the US dollar meant that pressures were also relieved on the dollar-linked currencies.
The company said that the overall rise in sales was mainly due to a one-off sale, achieved at the end of last year, which had to be accounted for in this quarter. Had this been registered in the previous quarter, the fact that domestic sales slipped 9 per cent to HUF 4.5 billion would have impacted results even further.
The overall loss was attributed to an increase in sales costs, up 20 per cent to HUF 895 million for the quarter. This, the company said, was due to a continued shift from canned food sales towards frozen foods. Although the cost price of frozen foods is lower, the distribution of is significantly higher than that of canned foods.
However, the company said that the outlook for the rest of the year should be better, as executives predicted that a rise in prices for the domestic market should have a positive impact on sales. The hike in retail prices is expected because Hungary has now joined the EU. Predictably the knock-on effect for food prices is already starting to be experienced in most new Member States, including Hungary.
Earlier this month Gloubs announced that it would embark on a 'roadshow' in western Europe with the aim of promoting itself to western investors. The company is hoping that Hungary's EU membership will improve its prospect of securing outside investment.
After a series of acquisition in 2003 Globus became the largest manufacturer of preserved vegetables in Hungary and is the second largest producer of sweetcorn in Europe. Before this quarter's results were announced the company had been hoping to raise its 2004 revenues to HUF 38 billion.