La Doria's (MI:LDO) results again demonstrate the strength of the business and the underlying strategy. Despite a continued challenging macroeconomic backdrop and a tough trading environment, sales were up 2.5% during the period, and 3.7% at constant currency, entirely driven by volume growth. As ever, the important factor at this stage in the year is the outcome of the seasonal campaigns. With regard to tomatoes, the 2018 campaign was critical due to adverse weather conditions, which caused volumes to fall and affected quality, hence production costs will be up. The fruit campaign was characterised by higher costs for peaches and nectarines, whereas apricot, apple and pear prices are expected to remain stable. We leave our estimates unchanged at this stage.
Less efficient tomato campaign
The heavy rains from the second half of August affected crop quantity and quality, and the processing efficiency of the tomato campaign. Overall volumes are now expected to be down 10-15% at a national level, and packaging and energy costs are expected to be up. Overall tomato costs are also likely to be higher, and – coupled with lower volumes – fixed cost leverage is likely to dent profitability.
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