Alfesca hf. - Financial Statement Release

- Robust results in difficult environment

Highlights

•	Net Sales €125.2 million down 2.5%  (up 1.7% on pro forma basis) 
•	EBITDA €6.4 million, down 11% against last year (up 12.5% on pro forma basis)
•	Quarterly results impacted by continuing high commodity prices, adverse
currency movements and cost of aborted transaction 
•	Acquisition projects on hold due to challenging trading environment and
exceptional turmoil in financial markets 

Xavier Govare, CEO:

“The general economic environment during the first quarter of our new financial
year declined considerably and was very challenging.  Despite the difficulties
posed by changing consumer demand and buying behaviour, we are pleased to
report good underlying performance with net sales remaining stable on a pro
forma basis, on a constant currency basis and excluding exceptional costs. 
Whilst overall the results for the quarter were affected by the difficult
economic environment, we have continued to drive operational improvement across
the Group and will carry on doing so with our strong management team and
focused approach. 

In general, the Group's activities in the first quarter were affected by five
key themes.  First, market conditions have been tough, as we continue to
experience high commodity prices as compared to the same period last year, such
as in relation to wheat, corn, soya, salmon and energy costs.  Second,
customers have also been hit by rising costs and there are clear signs of
trading down to private label or basic products in search of low cost
alternatives, driven by rising popularity of hard discounters.  Third, the poor
summer in Europe negatively impacted the sales of our summer range of products,
such as our prawn and duck based barbecue lines as well as our spreadables
range of products.  Fourth, the weakening of the pound sterling against the
euro negatively impacted the reported results of our UK operation which have
performed well during the quarter. Fifth, the strengthening of the US dollar
substantially increased the cost of sourcing of prawns. 

We managed the business through these difficult times by tightly controlling
costs and capital expenditure.  Our efforts were greatly helped by the fact
that we have a robust and diversified business and are well positioned in our
markets to compete by improving our efficiency and continuing to focus on
quality, innovation, value and execution.  Furthermore, where appropriate, we
have worked with our clients to secure necessary price increases to repair and
manage our margins. 

We remain the leading supplier of convenience, high quality, innovative food in
our chosen categories and our markets remain relevant to customers who seek
outstanding quality, greater convenience and a treat.  We continue to see an
opportunity to grow our market and our share of it over the longer term and in
the short term to be less impacted than others as we work our way through the
economic downturn that is impacting everyone. 

Overall, we expect trading to continue to be volatile due to the down turn of
the wider economy weakening consumer confidence and, consequently, consumer
demand.  We remain, therefore, cautious about the outlook.  However, we believe
we have laid down the foundations for a strong and diversified business, which
equips us well to face the challenging trading environment. 

We are now fully engaged in our most important quarter, which includes the
Christmas period, with a mix of concern and high hopes for a variety of
reasons.  Our concerns are borne from the very poor October climate at the
start of our second quarter, when the financial crisis took a dramatic turn
impacting more severely the general economy in Europe.  This in turn lowered
even further consumer confidence and demand, which no one can really tell how
long will last. 

However, we also face the second quarter with hope as we expect consumers will,
during this period and current circumstances, reprioritise their expenditure by
cancelling expensive holidays and restaurant visits and opt instead to dine at
home during the festive period.  Our positioning in the market and alignment of
our products to give consumers a real treat should be beneficial to us.  Our
strong promotional plans and range of new innovative products should serve us
well during this period.” 

Attachments:

earnings release - q1 2008-09.pdf

interim financial statements for 30 09 2008 (ig 14 nov).pdf