Roquette's core profit drops 13% despite pharma unit boost

PARIS (Reuters) - French food ingredient maker Roquette reported a sharp drop in core profit in 2024 on Friday, citing weaker sales in its main ingredients market, but good performance in its pharmaceutical activities helped cushion the fall.

The group's earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 13% to 529 million euros ($573 million) as annual revenue fell 10% to 4.5 billion euros, it said.

Sales at Roquette's Pharma Solutions unit rose 20% to 818 million euros, accounting for 19% of group revenue, driven by the integration of drug capsule maker Qualicaps and growth in drug delivery solutions.

"Our Pharma Solutions business continued its development, with a strong growth that confirms our strategy to reinforce our leadership in this market," Chief Executive Pierre Courduroux said in a statement.

"Despite a challenging environment, our Core Ingredients activities are in line with a market which remains below historical levels," he added.

Net profit fell 70% to 61 million ($66.2 million) impacted by the ongoing acquisition of International Flavors & Fragrances's Pharma Solutions and the Qualicaps integration costs.

The company’s performance follows two strong years, tied to inflation and war in Ukraine, which had driven up prices. 

Roquette emphasised that free cash flow had rebounded last year to 275 million euros from a negative 364 million the previous year, helped by lower investment spending and reduced working capital needs.

In 2024, easing inflation and better cost control supported margins, while the health and nutrition sectors showed signs of recovery, it said.

A hybrid bond of 600 million euros issued last year, intended to finance the IFF Pharma Solutions acquisition, helped Roquette cut net debt by 77% to 237 million euros, it said.

($1 = 0.9231 euros)

(Reporting by Sybille de La Hamaide; Editing by Kim Coghill)