On Friday 8 February 2013, the Venezuelan minister of finance announced a devaluation of the Bolivar (VEF) by 46,5% against the USD, effective as of 13 February 2013. The devaluation has been expected for some time as the official exchange rate of VEF/USD 4.30 has been under strong pressure. The parallel rate (VEB/USD) has for some time been around 18 VEF/USD.
The devaluation will not affect EAC’s results for 2012 as Plumrose’s revenue, costs and balance sheet in accordance with IAS are calculated at the rate of exchange in force on 31 December 2012.
The EAC Annual Report for 2012 will be published 27 February 2013.
Effect for 2013
As an effect of the devaluation, the profit and loss and balance sheet of Plumrose will be converted based on the new exchange rate VEF/USD 6.30 (according to IAS 29 (hyperinflation)). Further details and regulations for the transition are as yet unknown, but EAC will clarify the expected effects of the devaluation on the balance sheet, equity, profit and loss including the outstanding royalties and dividends from Plumrose in the 2013 outlook section and in the notes of the 2012 annual report.
The devaluation is expected to create a challenging business environment for 2013 with reduced economic growth, increasing inflation and eroding purchasing power. In this difficult market Plumrose intends – as at all previous devaluations – to mitigate the effect by dynamic price management, launch of new products in all price categories and by creating continued efficiencies throughout the value chain.
Previous experiences indicate that restoration of demand following a devaluation typically takes from 8-12 months. Plumrose holds a very strong market position as Venezuela’s leading producer of branded meat products and for 60 years, the business has successfully adapted to ongoing and major changes in monetary, political and economic conditions. It is therefore the Supervisory Board’s assessment, that the underlying values in Plumrose are intact despite the devaluation.
The East Asiatic Company Ltd. A/S
For additional information, please contact:
President & CEO Niels Henrik Jensen
+45 3525 4300
Group CFO Michael Østerlund Madsen
+45 3525 4300