The global ice cream company, headquartered in North Yorkshire and owned by private equity firm PAI partners, recorded a €2.2M drop in consolidated sales, to €167M, for the three months to March 31 2016.
On a like-for-like basis, and at constant exchange rates, sales fell by €5.9M. The impact of average exchange rates year-on-year impacted sales by a further €5.3M.
The company said a decline in the revenue of the European business, year-on-year, was largely the effect of exiting less profitable contracts in its German business, which has declined by €5.5M.
However, contrary to press reports, the manufacturer assured investors that it hadn’t exited its German business completely.
Slow market conditions
The UK showed a decline of €2.2M, on sales of €53.1M, with R&R citing slow market conditions and the timing of promotions that affected the start of the season.
Gross margin (before exceptional items) increased 4.7 percentage points from 34.2% in the three
months ended March 31 2015 to 38.9% in the three months ended March 31 2016.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITA) was €32.5M for the quarter, compared with €29.1M last year.
This included €1M of adjusted EBITDA contributed by R&R South Africa, which was bought from Nestlé last May for €8.6M.
The company said: “We acquired Nestlé South Africa’s ice cream business in May 2015. The results of R&R South Africa have been consolidated into the results of R&R Group for the three months ended March 31 2016, but not included in the results for the three months ended March 31 2015. Direct comparability of the results of the two periods is therefore impacted by this difference.”
Average exchange rates
R&R said the figures were also affected by the average exchange rates used to translate the UK and Australia business performance.
It said: “The adjusted EBITDA for the three months ended March 31 2016 was adversely impacted by €1.2M as a result of exchange rate difference when compared to the three months ended March 31 2016.”
In April, Nestlé and R&R signed an agreement to set up Froneri, a global ice cream and frozen food joint venture.
Nestlé and PAI Partners will have equal equity in the joint venture, which will have sales of around CHF2.7bn (£1.91bn) in more than 20 countries employing about 15,000 people.
Froneri will be headquartered in the UK and will operate primarily in Europe, the Middle East (excluding Israel), Argentina, Australia, Brazil, the Philippines and South Africa.