Massimo Zanetti revealed a drop in sales volumes, but a rise
in revenues, as it absorbed the impact of a focus on own-branded products, a
strategy which undermined in particular sales in the Americas.
The Italian-based group said that sales volumes of roasted
coffee dropped by 0.7% to 63,239 tonnes in the first half of 2017 – with the
decline even greater, at 4.1%, excluding the contribution of Nutricafes, the Portugal-based
coffee group bought last September for E74.5m.
However, sales rose by 7.4% to E475.6m during the half-year –
or by 3.2% excluding Nutricafes – in a reflection of a shift by Massimo Zanetti
away from lower-value business bagging coffee under customers' brands.
"There was a continued development in the sales mix towards
more profitable products," said the company, whose brands include Segafredo,
Chock full o'Nuts, Puccino's and Boncafé.
"The increase in revenue can be attributed to the more
effective mix of channels and products, as well as to the improvement in
average sales prices."
By volumes, sales under private label contracts fell by 5.2%
to 30,504 tonnes – slipping below 50% of group volumes, to 48.2%.
With Zanetti's private label business particularly strong in
the Americas, sales in the region suffered too, dropping 6.1% by volume to 37,134
Revenue growth in the Americas, at 3.0% to E227.2m, also
fell behind that in other regions, with northern European sales up 5.1%, and
those in southern Europe soaring 17.0%, feeling a particular boost from the Nutricafes
By market segment, the growth baton was picked up by the group's
food service operations, which raised revenues by 13.4% year on year.
Revenues from single service coffee jumped 42%, fuelled by
launches and marketing drives under the Segafredo brand in France, Greece,
Italy, Portugal and Spain.
However, "higher investment" in advertising and promotions
came at a cost, which helped curtail operating profit for the half year to E10.81m,
a drop of 3.1% on the same period of 2016.
Earnings dropped 14.6% to E4.40m, with the decline also
fuelled by foreign exchange factors.
Shares in Massimo Zanetti - which said it was sticking by its full year targets, which include growth of 2.0-4.0% in sales and 10.0-12.0% in ebitda - closed up 1.1% at E8.15 in Milan.