NeutraHealth initiatives act as shield from summer slump
tough trading conditions over the summer months, as its recent
initiatives over exports, online trading and retail start to bear
fruit.
In an update issued yesterday, the UK nutraceutical shell company said that the summer is traditionally quiet for the industry - and this year's extended season made it tougher than usual. Chairman Martin Gatto told NutraIngredients.com: "When the sun shines, people feel better," - and he stressed that this is a phenomenon that affects the whole of the nutraceutical industry. But NeutraHealth has said it has been somewhat buffered from the scorching effect that the hot weather may have had on others' sales thanks to several initiatives over the last six months. NeutraHealth was created in a bid to consolidate the many small players in the UK nutraceutical industry. Its first acquisition, of probiotics player Biocare for £16.1 million (€23.2m), is described as a cornerstone of the model; this was followed in February with a second, bolt-on acquisition of Nutrigold for £0.5m (€0.73m), which is seen as an opportunity to realise synergies by bringing together order fulfilment and administrative functions.
One of the key initiatives is a focus on export opportunities, with 100 per cent growth year-on-year. Long lead times necessitated by regulatory compliance has meant that new markets are now coming online.
Gatto said that exports currently account for around 15 per cent of NeutraHealth's sales. These are presently focused on Europe, but it is also looking further afield. Discussions are said to be underway for 15 countries.
In May the company launched its online trading site for BioCare, which is now responsible for 4 per cent of sales.
The company's core business revolves around practitioner products, and in May it put together a 12-strong team of practitioner customers as ambassadors for the products.
It has also made its first inroads into the retail market with the launch of the Travelguard lifestyle brand this month - an introduction that was delayed from earlier in the year due to talks with retail acquisition targets.
"We have set out to do all the things we set out to do in 2006, which will deliver in 2007," said Gatto.
However while internal reorganisation measures are expected to yield long-term benefits, bringing them into force has necessitated some one-off costs: £100,00 (c €149,000) in employee termination costs; previously announced £99,000 (€147,000) in relocation and set-up costs following the Nutrigold acquisition; and £150,000 (€223,000) in abortive acquisition costs.
The company has released no figures at this time, but for the first half of the year it reported a total turnover of £4.3m (c €6.3m) and operating profit of £0.75m (€1.1m).
Gatto said that NeutraHealth has yet to finish building its base of companies from which it will seek to grow organically, and expects to make two or three more acquisitions in the next couple of years.
