Research Management

High-End Food & Beverage Companies Accelerated their Growth to 11% in 2011

15 Oct 2012, by Fabio Todesco

The results of the first "Food&Beverage Luxury Insight" by SDA Bocconi and Altagamma, presented this morning in Milan

Final 2011 results show that the high-end food&beverage industry is improving, according to the Food&Beverage Luxury Insight, the first annual report by SDA Bocconi and Altagamma analyzing the 2011 balance sheets of the international high-end food&beverage companies and presented this morning in Milan.

Being the first edition of this annual study, the report analyzes the performances of a selected sample of 42 internationally renowned listed companies with sales in excess of € 100 million as of 2011, operating in related industries: Processed and packaged food, Confectionery, Alcoholic drinks, Foodservice and Hospitality.

Surveyed companies grew by 11.04% in 2011 (7.98% in 2010), consolidated sales growing for 32 companies out of the 42 in the sample. This positive dynamic did not translate into increased profitability as ROI decreased by 0.27% from 5.65% in 2010, while ROE also experienced a contraction, reaching 12.22% (vs. 14.18% in 2010). However, acceleration in sales was followed by an increase in operating efficiency, the average EBIT Margin growing for the third year in a row to reach 13.28%. The average cash generation decreased to 16.60% of sales (16.95% in 2010), even if the weight of working capital continued to go down to 21.77% of sales. The average trade debtor days increased to 46 days (vs. 45 in 2010).

"The 2010 positive trend is confirmed, even strengthened by the 2011 annual data", SDA Bocconi's Massimiliano Bruni, co-author of the report, says. "The growth in investments to 3.46% of sales in 2011 from 2.42% in 2010 suggests that the majority of the players have been intensifying investments in the development of the core business and in supporting future growth".

"The companies' positive performances are due in part to the market recovery, with a growing demand pulling players forward. But this is also the result of last years' policies aiming at better operational efficiency and at better management of the working capital. This attention to operational efficiency was confirmed by the steady increase in EBIT margins and by the significant reduction of the level of working capital to sales (-3.53% from FY2010)".

Alcoholic drinks and Diversified food have been the best performing clusters. The companies within the Alcoholic Drinks cluster are the only ones that have been able to maintain a high EBIT margin dynamic and as such get higher ROE despite a lower asset turnover ratio on average. Companies within the Diversified food sector delivered the highest ROI thanks to high level of asset productivity.

INDUSTRY FINANCIAL HIGHLIGHTS

Parameter	Average
Sales Growth	11.04%
Return on Investments (Roi)	5.28%
Return on Equity (Roe)	12.22%
EBIT Margin	13.29%
Asset Turnover	0.48
Net Cash Flow to Sales	16.6%
Gearing	0.65
Current ratio	1.6
Intangible Assets Weight	30.74%
Fixed Assets Weight	26.51%
Working Capital to Sales	21.77%
Trade Debtor Days	46
Total Investments on Sales	3.46%