Swiss food and drinks group Orior has tweaked its sales and margin guidance lower amid what CEO Daniel Lutz said remained a “challenging environment”.
Despite registering first-half organic growth of 1.4%, Orior now expects full-year sales to rise 0.5% to 1.5%, compared to 1.5% to 2.5% previously. The outlook for the EBITDA margin was adjusted to 9% to 9.3% from 9.3% to 9.5%.
The Zurich-headquartered group saw EBITDA drop 12.8% in the six months through June to SFr26.6m ($31.1m), while the margin declined 130 basis points to 8.5%, the company reported today (21 August).
Orior explained: “The rapid rise in pork prices in autumn 2023 and their continued high levels, together with high personnel costs and shifts in the product and channel mix, had a negative impact on profitability.
“The main driver of the high personnel costs was the planned increase in staff numbers at Casualfood in order to cover the busy summer months.”
As a result of those factors, EBIT fell almost 24% to SFr12.8m and the EBIT margin dropped 130 basis points to 4.1%. Net profit was down 27% at SFr9.4m.
Looking ahead to the back half, the supplier of Albert Spiess cold meats, Biotta vegetable and fruit juices and Pastinella pasta said the refinement division is likely to underperform compared to the corresponding period last year.
However, Orior said the group as a whole is expected to improve profitability “significantly”, along with a “moderate” increase in organic growth.
“We anticipate the international segment will once again perform well, and the convenience segment is also forecast to experience modest growth,” the company added.
Commenting on the first-half results, Lutz said: “The results are in line with our expectations. We are very pleased with the performance of the international segment. Given the overall conditions, a considerable share of the Swiss business also did well.”
Orior is due to outline its new five-year strategy in December to replace the plan through 2025, which envisages annual organic growth of 2-4% and an EBITDA margin of greater than 10%.
“In view of the changing overall conditions, the five-year planning was initiated ahead of time in spring 2024. This includes an in-depth revision of the business and product portfolio,” the company said today.
“An update on Orior’s site development is also part of this, with the aim of boosting profitability.”
Orior’s reported group sales for the first half were up 0.6% at SFr314m. The international division, which includes the Culinor, Casualfood, Gesa and Spiess businesses, posted growth of 5%.
Sales in the refinement segment of cooked and smoked meats rose 1.6%, although convenience, which includes Orior’s Happy Vegi Butcher alternative-meat brand, saw sales decline 4.6%.
The company said that division “was unable to fulfil expectations”, while it added a “lack of export sales of plant-based products had a significant impact in this area”.
