IFCO’s currency adjusted group revenues and operational profitability both continued to grow in Q1 2011 as compared to Q1 2010. See the Q1 report here.
IFCO’s currency adjusted group revenues grew by 9.7% to US $205.7 million and currency adjusted EBITDA increased by 8.1% to US $34.3 million in Q1 2011 compared to Q1 2010. As a result, RPC Management Services delivered gains in currency adjusted revenues (by 16.4%), gross profit (by 10.4%) and EBITDA (by 2.7%) in Q1 2011 as compared to Q1 2010. Q1 2011 revenues in the Pallet Management Services business segment increased (by 1.7%), gross profit (by 11.2%) and EBITDA (by 26.2%) compared to Q1 2010.
RPC Management Services’ revenues significantly increased in Q1 2011 by US $15.9 million or 15.4% (currency adjusted by 16.4%), compared to Q1 2010. These gains resulted from organic growth in the core business in RPC Europe as well as winning new retailers in certain markets, like Spar in Austria and Carrefour in France. The South American and US business continued to grow, although growth in the RPC US business was tempered significantly as a result of adverse weather during Q4 2010 and Q1 2011 that reduced crop levels.
Revenues in Pallet Management Services grew slightly in Q1 2011 by 1.7% to US $86.3 million compared to Q1 2010. The company experienced gains in both pallet volumes and average unit prices as compared to the prior year quarter. Service related revenues increased marginally in absolute terms and as a percentage of total revenues. These gains were partially offset by significantly lower revenues in the Custom Crating division in Q1 2011 than in Q1 2010.
Gross profit margin on a group level increased slightly in Q1 2011 by 0.2 percentage points to 20.9%. RPC Management Services’ gross profit margin declined from 25.3% in Q1 2010 to 24.1% in Q1 2011, largely as a result of decreased RPC US gross profit margin due to higher fuel and transportation tariff charges. Gross profit margin in the Pallet Management Services business increased to 16.5% from 15.1% in Q1 2011.
Net profit significantly increased from US $0.9 million in Q1 2010 to US $5.4 million in Q1 2011. The net operational improvements, lower ICE related expenses and lower net interest costs were partially offset by a higher tax provision.
The capital expenditure levels increased by US $8.6 million, or 34.6%, to US $33.5 million during Q1 2011. The realization of the planned growth in Europe, expectations of a timely volume recovery in the RPC US business and increased granulate prices have led to increased investments in the RPC pool in 2011.
ROCE from continuing operations, on a LTM basis, increased to 23.1% as of March 31, 2011, compared to 20.4% as of March 31, 2010. This positive development is the result of the Company’s increased profitability and continuous improved utilization of the RPC pool.
The European RPC Management Services business will continue to leverage the leadership position and market experience to meet or exceed overall market development. We plan to increase the sales initiatives and to continue to expand the geographic presence in Western Europe, Central Eastern Europe (CEE) and South America. Recent wins of new retailers, like Carrefour in France, Spar in Austria and MERCATOR in Slovenia support the expectations. In the United States, we realized increases in the overall RPC penetration among grocery food retailers and plan to grow in excess of this market development. Based on the solid RPC business model, we expect that the RPC Management Services businesses will continue to grow in 2011. The investments to support this growth will be carefully aligned with the business development and are targeted to continually increase the return on the invested capital.
The focus will remain on new and innovative products and markets where we can achieve profitable growth, as well as continuing to deliver on the ongoing responsibility to the global environment.
The Pallet Management Services business continued to feel the negative impact of the recent economic downturn, primarily as a result of pressure on prices from weak market demand. Nevertheless, we remain confident that the key competitive advantages of the Pallet Management Services business – the breadth of service offerings, the national network and the value proposition at a national and local level – have not changed and should allow the Pallet Management Services segment to grow revenues and increase profitability in 2011.