Deoleo finally purchased by the british CVC

Spanish firm has been recently(8 months) acquired by the british venture capital fund CVC, which has paid 439 million euros for the majority of its shares, controlling the 70% of the company. The other 30 % is still controlled by spanish entities, assuring firms nationality, but the investment fund has announced that it will try to buy the rest of the shares. The CVC offer has been the best one : it will also face the debt the company was dragging of more than 400 million euros.

Deoleo purchased by Italian investment funds?

Here we find a youtube video uploaded by LaSextaNoticias. It explains the spanish government fear for its national settled firm Deoleo to be purchased and controlled by italian businessman. An Italian investment fund is interested in the undertaking in spite of the government and Andalusian board opposition ( they believe it would have very negative effects on oil spanish markets). Furthermore, this Italian-Spanish oil war is not something new, lots of italian commercialized oil are in fact from Spain.

Olive Oil Giant Deoleo on the ‘Crucial but Cruel’ U.S. Market

Not just the vastness but also the profit margins make the United States arguably the most important olive-oil market in the world, Spanish-based olive oil giant Deoleo says in a new report.

The U.S. is the land of opportunities, but it is also a cruel market for those who are not prepared to fight.-Deoleo Annual Report

Deoleo said olive oil markets are usually high profit, low consumption or high consumption, low profit but in the U.S., both the market and unit profit margins are big.
“In contrast with (U.S.) retail prices of over $8/liter, in Italy prices are around €4/liter and in Spain, €3/liter,” Deoleo said in its 2013/14 annual report. The main reason is North American retail margins are very high, while in Spain olive oil is often used as a loss leader “which is extremely destructive for the category.”
The U.S. market is thus crucial because the profit there, apart from providing an outlet for production, helps finance development, innovation, and marketing which have a flow-on effect throughout the value chain, it said.

Half the olive oil really Spanish

If focusing on the areas where olive oil consumption is concentrated the U.S. – the east coast, west coast, Texas and around Chicago – “the per capita consumption in value is close to that of the traditional oil-consuming countries.”
While on paper Spain provides under a quarter of the about 300,000 tons of olive oil the U.S. market imports annually, when taking into account the level of processing, packaging and re-exportation of Spanish olive oil by Italy, Spain supplies about half of all olive oil consumed in America, Deoleo said, “so any fall in consumption would have a big impact on its ability to market national production.”

Deoleo Requests Extension for $83M Tax Bill

Spanish olive oil giant Deoleo has asked for a deferment of a €63.3 million ($83 million) tax bill to the Italian government.
The debt comes form the actions of the conglomerate’s Carapelli Firenze subsidiary, which is swimming in unpaid customs duties, tax bills, interest and penalties. The decision is pending in court. 
Deoleo argues that the baggage of Carapeli Firenze should not impact the business actions of Deoleo as a whole, while the customs office sees the dependent subsidiary as being the full responsibility of the corporation.Deoleo is the number top seller of bottled olive oil worldwide, whose 15-brand portfolio includes big names like Bertolli in the US and Italy, and the Spanish market leader Carbonell.
The news comes as another potential blow to the already hurting Deleo, which on August 28 announced net losses up to €25.5 million ($33.6 million) for the first half of 2014. The company posted a profit of €4.2 million ($5.5 million) for the same period of 2013.The company said the losses were due to weaker sales which fell 6.4 percent to €356.9 million ($469 million) during the first half of 2014, coupled with the cost of refinancing debt. Earlier this year, the company completed a refinancing deal that cost it €23 million ($30.2 million) alone.
However, the company stressed in a release that all is not doom and gloom. The group’s operating profit increased 49.7 percent. The earnings before interest, taxes, depreciation, and amortization was up to €41.2 million ($54.1 million) due to improved margins in the key markets of Spain, Italy and North America

Sources: The wall street journal ; just food ; Alcuza

Balance Sheet 20!3

The concept of  balance sheet refers to  a financial statement that summarizes company´s assets,liabilities and shareholders equity a specific point in time.

 Taking into account the balance sheet of Deoleo SA in 2013 we can see that current assets had a value of 477,000 and current liabilities a value of 285,000 ,so current assets were higher than current liabilities,this means that there were no short-term liquidity problems as the cash available over the next year was higher than the cash to be paid out. In 2013 the working capital(Current Assets - Current Liabilities) was 191,826,this positive result means that Deoleo SA fully financed its non-current assets and part of its current assets with long-term capital.  In 2012,the current assets were 456,764 so we can see an increase as well in the current liabilities 200,236 ,and the working capital also was higher.

 The ROA(return on assets) is an indicator or how profitable a company is relative to its total assets and explains the idea of how efficient managements is at using the assets of the firm to generate benefits,the ROA can be calculated net income/ assets (   42,104 / 1,724,000 ) x 100 = 2.44% . The ROE (return on equity) is an indicator that measures a corporation's profitability by revealing how much profit a company generates with the money that shareholders have invested. The ROE can be calculated  net income/ equity  (42,104 / 625,000) x 100= 6.74%

 In conclusion,looking at past years we can see that the debt of Deoleo SA is decreasing continuously but not too much  and the total assets have remained almost constant.

	2012	2013
Assets	1,666,852	1,724,000
Liabilities	1,106,202	1,099,000
Equity	560,650	625,000

Deoleo and FINUT Agree to Further Olive Oil Research

Spanish multinational company Deoleo has signed a new agreement with the Iberoamerican Nutrition Foundation (FINUT) to support research and innovation efforts in the olive oil sector. Through the agreement Deoleo joins FINUT’s Advisory Council and will collaborate on different projects and studies together with universities throughout the region.

                  

                 “Deoleo and FINUT share certain values on which the philosophy behind this agreement lies: innovation, quality and health,” said Arjan Geerlings, scientific director of regulatory affairs at Deoleo.Geerlings added that working with FINUT represents “a step forward in our strategy to position ourselves as leaders in the area of innovation in the olive oil industry.”

Among its goals, Deoleo identified strengthening technological innovation programs that contribute to the development of the production and marketing of healthy oils, as well as designing programs to disseminate knowledge about the appropriate uses of these products.
FINUT’s stated mission is to promote knowledge, understanding, development, research and innovation in all areas related to nutrition and food science through international cooperation in the Iberoamerican region.
Based in Madrid, Deoleo is the global leader in bottled olive oil sales and is currently valued at over $400 million. The company’s brand names include Bertolli (US and Italy) and Carbonell (Spain).

Sources: eleconomista.com ; oliveoiltimes.com

Financial Cash flows 20!3

For the years 2012 and 2013, these are the inflows and outflows of cash and cash 
equivalents of Deoleo. This information shows the ability of the entity to generate cash and cash equivalents and the needs to use those cash flows.There is a growth in the net increase in cash and cash equivalents, as we can see at the bottom of the picture, it goes from 9,889 euros in 2012 (118,227 at the beginning of the year and 128,116 at the end) to 50,410 euros in 2013 (128,116 at the beginning and 178,526 at 
the end).
Now, depending on the activities in which the cash movements take place, the financial 
cash flows have three parts: The operating activities, which are the main revenue-producing activities of the entity, and in which we can tell there is an increase from 62,264 euros in 2012 to 137,667 euros in 2013. 
This positive result shows a profit that means Deoleo did generate enough cash in 2013 to pay its operating costs. Also, we can see the growth in the difference of the result before taxes, as in 2012 there was a loss of (163,136) euros while in 2013 there was a gain of 36,349 euros. 
In the cash flows from the investing activities, there is a difference from (6,162) in 2012 to 
(11,001) euros in 2013, in which we can see that less money has been paid on investments 
and the proceeds from disposal have decreased.
And finally the financing activities, that show the changes in equity and borrowings. And in 
which we can see a decrease fr
om (46,213) euros in 2012 to (76,256) euros in 2013.

Income Statement 20!3

The next important statement, which is critical too, is the income statement.
The income statement shows the company’s revenues and expenses during a 
particular period. The main purpose of the income statement is to show 
managers and shareholders whether the company made or lost money during the 
period being reported. In this case the period that is going to be analyzed is 2013.
In 2013, Deoleo S.A. had a net income of 42,104. This income is quite different 
to the one of 2012, which was -235,438. That is, in one year Deoleo S.A. has 
increased its net income 277,542. As it is possible to see in the table below, this 
increase in net income is due to some decreases. 
In 2012 this company´s wage expenses amounted 27,269, and in 2013 they 
amounted 16,756. In addition to these operating expenses the amortization, 
depreciation and impairment costs have decreased from 2012 to 2013. In 2012 
these costs amounted 19,679, whereas in 2013 they amounted 22. This together 
with other increases such as the sales, which in 2012 amounted 452.990 and in 
2013 they were 553.660, and the financial revenues, which in 2013 were 54,636 
and in 2012 28,085, sums up the increase of the net income from one year to 
another.

	2012	2013
Operating profit (loss) (Net sales, Wage expenses, Amortization and other expenses)	(4,368)	28,480
Financial Result	(178,812)	17,175
EBIT	(183,180)	45,655
Tax income	(52,258)	(3,551)
Net Income	(235,438)	42,104

It is possible to see that the numbers in 2012 are quite negative, whereas in 2013 

they are positive. This is actually reflected in the net income of Deoleo S.A. That 

is, ths company has worked hard in order to increase its net income, that is, the 

profit of this period. It has increased its sales in spite of the fact that the wages 

have decreased. It is not possible to know if Deoleo S.A. has fired employees or 

if it has just decrease the wages. But whatever it is, it is quite difficult to increase 

the production with less workers or with less motivation (if money can be seen as 

an incentive).

Annual Report 20!3

The Annual Report of Deoleo is formed by 3 parts: the Annual report, the Annual Financial Report and the Sustainability Report.
In the first part of the Annual Report we can find the Chairman’s statement and the CEO’s 
statement. The fact tah there are two statements instead of one, means that the Chairman 
and the CEO are different people. Óscar Fanjul Martín is the chairman and Jaime Carbó 
Fernández is the CEO of Deoleo.
Secondly, the financial highlights, which are a summary of all the financial information of the 
company, including assets, earnings, debt, equity… 
In 2013 the company’s business generated excellent results: €36 million profit before tax and €20 million profit after tax, and the EBITDA estimates were met. The group managed to make up for a very complicated start to the year, with an upswing in the fourth quarter of the year to historic profit levels. The EBITDA/sales margin for 2013 stands at 10%.

Consolidated Profit & Losses Account
€ 0	2013	var 13 vs 12	2012	var 12 vs 11	2011
Net turnover	812,989	-1,90%	828,868	-13,70%	960,806
Advertising	16,298	0,40%	16,225	31,50%	12,337
EBITDA	80,111	-9,20%	88,257	21,20%	72,802
%EBITDA/ Net turnover	9,90%	-7,40%	10,60%	40,50%	7,60%
Profit before tax	36,349	n.o.	163,136	n.o.	-9,058
Profit after tax	10,911	n.o.	245,565	n.o.	-19,139

At year-end 2013 sales were slightly down on the previous year, although the evolution in the  last few months of the year was very positive. Employee benefit costs dropped 23% year on year and other operating expenses were 18% lower. Investment in advertising was maintained as an instrument to boost our brands, but overheads were streamlined.

In the Annual Financial Report we can find that the Deoleo share rose by 70.91% during 2013, performing considerably better than its benchmark index, Ibex Small Caps, which rose 44.29%, and the selective index IBEX 35, up 21.42%.

Every year Deoleo publishes a report which sets out and assesses the information on the last 

olive crop year and forecasts for the current season, in this case the 2013/14 crop year.

The report includes figures on production, consumption, imports, exports and the evolution of prices in Spain and the principal producing countries in the Mediterranean region (Italy, 

Greece and Tunisia), and outlines the situation in new producing countries in the southern 

hemisphere.

Introduction to Deoleo S.A.

Deoleo is a Spanish food group that quotes on the Spanish stock market and it is the
world leader in sales of bottled olive oil. Under “Deoleo”  there are famous and well
recognized brands as Carbonell, Sasso, Bertolli and Carapelli.
Deoleo was founded in 1990 by a company called Arana Maderas S.A. After Deoleo´s
foundation, the company received the name of Grupo Industrial Arana, S.A. In 1992 it
bought a top-selling rice brand called Hijos de J. Sos Borrás, S.A. After this merger, the
company changed its name to Sos Arana Alimentación, S.A. and purchased other
famous rice companies as Saludaes and American Rice. At the beginning of the 21st
century, in order not to focus only on the rice sector, it purchased Cuétara S.A. Hence,
Sos Arana Alimentación entered in the biscuit sector. They both merged giving rise to
Sos Cuétara S.A. In order to extend its industry, Sos Cuétara S.A. purchased the
company Koipe S.A., which was a leader in the Spanish olive oil market and it was the
owner of the brands Carbonell and Koipesol. In 2003 these two companies merged and
from this point till 2008 it purchased several Italian brands as Sasso, Carapelli,
Friol and Bertolli. Finally, it became the largest industrial group in olive oil in the
world.
Nevertheless, there were some financial problems. With Bertolli´s purchase, the
company´s financial debt rose hugely so it had to sell Cuétara. This first divestment
made Deoleo be primarily focused on the rice and oil sectors. Due to more problems,
the company had to replace the top management and to restructure its economic system.
Finally, in 2010, with the sale of the rice business, the company was gratefully
refinanced.
Unfortunately, after this bad economic situation, the company is nowadays only focused
on the oil business.