Spain's Ebro Foods expects accelerating inflation to push up 2022 operating costs by €60 million more than anticipated, largely due to a Spanish transport strike and Russia's invasion of Ukraine.
As wheat and energy costs have soared in recent weeks following Russia's invasion, the owner of brands such as Tilda rice and Garofalo pasta said on Wednesday it estimates operating costs of €234.4 million in 2022.
'Considerable Collateral Impacts'
Ebro Foods said it does not have any exposure to Russia or Ukraine, but the war has had 'considerable collateral impacts', mainly in fresh waves of cost inflation for raw and auxiliary materials, transport, energy and labour costs.
It also mentioned a transport strike in Spain in March, which broke out in response to rising fuel costs and caused huge traffic jams across the country, leading some factories to halt production as they could not guarantee deliveries would be received on time.
"(The strike) had an impact on shelf stock, as consumers have been bulk buying certain products and brands, while other products were out of stock as they could not be delivered to our customers on time or in the right way," Ebro said in an earnings presentation.
Ebro Foods' first-quarter net profit dropped 21.4% after it booked a hefty gain from the sale of its North American pasta business in the same period of last year.
Profit from continuing operations rose by 14.5% to €41.5 million over the same period.
In March of this year, the company reported a 24% jump in profits in full-year 2021, driven by asset sales. It also said it foresees harder times ahead as a result of droughts and rising energy prices.