The Bell Group takes its toll on high raw material prices

In Switzerland, too, the meat business is not easy

In the first half of 2004, the leading Swiss meat processor Bell had to report a drop in profits. The reason for this is primarily the persistently high raw material prices. Sales increased by 2,3% to CHF 744 million, the consolidated result fell by 18,5% to CHF 15,9 million.

As expected, the consumer environment in the first half of 2004 proved to be very challenging for the Bell Group. Above all, the persistently high price level had an inhibiting effect on consumption. As a result of the higher price level, sales rose by 2,3% to CHF 744 million, but the volume output by the companies was only within the range of the previous year. At CHF 2004 million, profit development in the first half of 15,9 was around 18,5% below the previous year and therefore below expectations.

The raw material prices for slaughter animals, which were around 7% higher on average, put great pressure on our gross margins. In addition to the already very high procurement prices for cow meat (+21,2% compared to the previous year), the price for pork rose again by 10% in May and June alone. A passing on to consumers is only possible to a limited extent due to the fierce competition. The gross margin therefore fell by 2,4 basis points to 32,0%. The operating costs that Bell can influence were reduced.

The areas of the Bell Group developed as follows:

Bell Fresh Meat suffered from high raw material prices, which had a negative impact on both consumption and gross margins. The consumption of beef in private households declined in the first half of the year. Pork, on the other hand, increased by the same amount. The total slaughter volume in Switzerland was slightly lower, while at Bell it increased by 4,9% to 42 tons. Bell Romandie, which specializes in the needs of the French-speaking Swiss market, built on the good results of the previous year. Developments at Bell Charcuterie varied. The production volume of cooked cured products and raw sausage increased, while sales of boiled sausage suffered not least because of the poor barbecue weather.

The consumption of poultry meat fell surprisingly significantly in the first half of the year, especially for imported goods. The decline was only partially offset by Swiss poultry. Overall, slaughtering increased by around 5 percent in Switzerland. At Bell, slaughter increased by 5,3 percent to 10 tons. At Bell Poultry, the overcapacities of all market participants are having an effect, since Swiss production could only be gradually reduced. The high volumes on the market accordingly led to intensified price competition with corresponding pressure on margins.

Bell Seafood continues to face intense price wars. In addition, sales declined despite strong Easter business. Further measures for a more efficient organization will be implemented in 2004. Bell Convenience is feeling the changes in the range of products at key customers and the consolidation of the market. Sales were around 8% lower than in the previous year. However, Bell is still one of the strongest convenience providers in Switzerland. In the extremely competitive catering market, Bell Gastro Service is on course for the previous year. A new distribution and logistics concept is currently being tested in a pilot operation in Basel and, if successful, will be replicated on the other platforms.

Outlook

In view of the adverse general conditions, Bell's management assesses the result as satisfactory overall. In this environment, the structure and organization of the Bell Group proved to be very efficient for the most part and contained the negative external influences. In the second half of the year, an upturn in the poultry and convenience food sectors is expected, as well as a recovery in fresh meat and charcuterie in the event of falling raw material prices. Numerous activities are planned at the sales level, which will particularly affect the winter season.

Source: Basel [ bell ]