Zorbas reports lower profits

A Zorpas & Sons Plc posted a weak set of results with first quarter 2008 net profit declining by 65.9% year-on-year to EUR308.000 on the back of higher fixed costs related with the new production line in Larnaca, a higher labour costs base vs. 1Q07, higher raw material and energy costs (not all price increases were passed on to end customers) and higher net finance charge. Significant losses amounting to EUR 136.000 from investment revaluation compared to corresponding gains in 1Q07 also affected the bottom line.
Total sales were up 16.8% YoY to EUR 15.0 mln mostly due to the higher number of retail outlets operating in the period at 50 compared to 45 in 1Q07 according to Marfin Egnatia analysis.
Despite elevated fixed costs associated with the commencement of operations of a section in the new production, as well as further increases in other production costs, gross profit advanced by 12.6% yoy to EUR 5.42 mln. However, gross profit margin came in lower by 130bps to 36.1% in 1Q08.
Total operating expenses were up by 27.1% yoy to EUR 4.91mln, while as a percentage of revenues they worsened by 270bps to 32.7% in 1Q07.