HAIFA, Israel—Frutarom released financial results for the third quarter 2009, with sales totaling $111.6 million, a decrease of approximately 1.6 percent in local currency terms compared to the third quarter 2008.
Gross profit in the third quarter of 2009 totaled $41.2 million compared to $45.3 million in the same quarter last year. The decline in gross profit is a result of the reduction in sales. Gross margin in the quarter totaled 37 percent compared to 37.7 percent in the same period in 2008. Gross margin rate was achieved in spite of a decline in sales thanks to the actions taken by Frutarom to reduce and tightly command and control the expense level.
EBITDA achieved by Frutarom in the third quarter 2009 totaled $18.5 million which comprise 16.6 percent of sales compared to EBITDA of $20 million which also comprise 16.6 percent of sales in the third quarter of 2008.
Net profit in the third quarter of 2009 increased by 6.3 percent and totaled $10 million compared to $9.4 million in the same period last year. Net margin improved and reached 9 percent compared to 7.9 percent in the same period. During the first nine months of the year, non-recurring costs in the amount of $1.3 million for the restructuring plan in the company's activities in Germany and the United Kingdom mainly due to the acquisition of the Savory activity of Chr. Hansen and Oxford were recorded compared with non-recurring revenues in the same period last year.
During the third quarter of 2009, Frutarom continued to improve its cash flow from current activities, which reached $27.5 million compared to a cash flow of $12.6 million achieved during the third quarter of 2008. In the first nine months of 2009, Frutarom generated a record cash flow from current activities in the amount of $57.9 million compared to $21.2 million in the same period last year. The strong cash flow achieved by Frutarom enabled the reduction of the level of its bank debt, in spite of the three acquisitions it has already implemented this year and will enable it, together with a bank support, to continue and implement additional strategic acquisitions.
The sales in the quarter and in the first nine months of the year were also affected by the continuation of the global crisis and the economic slowdown in the world, which temporarily changed the growth trend which characterized most of the global markets in recent years and the business environment in which Frutarom operates. As a result of the crisis, many customers vigorously act to reduce their inventory levels. In addition, a decrease in the trade and marketing activity in Israel which partly results from focusing on products with higher profit margins, contributed approximately 2 percent to the decrease in sales.
Frutarom estimates that it maintained its market share among its customers and the stabilization of the global economy in recent months, the moderation in the fluctuations of currencies, the halt of the destocking trend and the signs of gradual improvement in consumption, including in countries significantly affected by the devaluation of their currency, will contribute to an improvement in its sales level and to future return to growth trend at rates similar to those characterizing its activities in the past.
Frutarom focused during 2008 on the integration and utilization of the many synergies from the seven acquisitions made in 2007 Frutarom resumed its acquisitions strategy in 2009 and has implemented three successful strategic acquisitions including Oxford, FSI and the Savory activity of Chr. Hansen. The three acquisitions implemented during the first half of the year contributed to the sales in the third quarter approximately $8.1 million and contributed to the sales of the first nine months of the year approximately $17.2 million.
Frutarom estimates that its strong cash flow, its solid capital structure and strong support from leading banks will enable it to implement additional strategic acquisitions and exploit opportunities created and which will be created as a result of the global economic crisis.