Fazer Group: strengthened its positions and reformed

Helsinki / FI. (fg) Fazer Group´s turnover 2009 amounted to 1’441,1 million EUR in 2009 compared with 1’159,7 million EUR in 2008. The Group´s operating profit stood at 44,5 million EUR compared with 135 million EUR in 2008.

A comparison with the previous year does not give a full picture of developments as Lantmännen Färskbröd was not included in the figures for 2008 and the figures for Fazer Konfektyr are noted in the result as an affiliated company. In addition, figures for 2008 includes capital gains of 90,3 million EUR related to the sale Pick + Mix confectionery concept.

The comparable turnover fell by 8,8 percent compared with the previous year. The exchange rate effect accounted for around 55 percent of this reduction. The Group´s operating profit, excluding sales profits and losses, amounted to 45,5 million EUR compared with 44,6 million EUR in 2008.

In 2009, Fazer developed its organisation in order to achieve increased performance. Three of Fazer´s divisions – Fazer Bakeries, Fazer Confectionery and Fazer Russia – were combined to form a new Fazer Bakeries + Confectionery business area. Fazer´s restaurant and service business will be reformed during year 2010. As from 23 March 2010, the name of the business area has been Fazer Food Services (previously Fazer Amica).


Source: Fazer Bakeries + Confectionery

Fazer´s organisational reform aims at even better efficiency and capability to transform and adapt to a changed operational environment. The target is to further strengthen Fazer´s brands, create a new kind of co-operation with customers, consumers and other interest groups and develop new business and product concepts. The new operational model will allow Fazer to fully utilise the synergy benefits brought about by the recent significant growth.

«It was a challenging year in many respects but despite that, we reached a satisfactory result. I am pleased that we managed to adjust our costs to the market situation in time and started to develop our operations. The challenge for 2010 is to get the new organisation structure function efficiently, achieve the planned synergies and to meet our growth targets», says Group President Karsten Slotte.

Strong position in Finland supported in a challenging market situation

Fazer did well in Finland in 2009 despite the challenging market situation. Turnover grew to 783 million EUR (564 million EUR in 2008). The Group has nearly 7’000 employees in Finland. The economic recession was felt in all Fazer´s areas of operation during 2009. Increased price awareness among consumers, decreased consumption and changes in the operating environment affected the catering service business the most in Finland.

The market share of Fazer Food Services (previously Fazer Amica) as Finland´s leading catering service was strengthened in 2009. Fazer Food Services did well in competitive tendering despite the recession. Customer satisfaction remained high. A new kind of Fazer restaurant world F8 was opened in the Stockmann department store in Helsinki in the spring, and it will be further extended until autumn 2010. Cuts in demand for catering services weakened the business area´s result in Finland. The customer companies´ reductions in operations and decreases in catering for events and meetings required adjusting operations to the new conditions.

Fazer Bakeries achieved a good result and strengthened its position as a market leader in Finland. The sales of in-store bakeries grew throughout the country. Four new in-store bakeries were opened during the year, and four will be opened in 2010. The in-store bakeries strengthen Fazer´s regional bakery operations. Fazer invested about 15 million EUR in its bakeries in Vantaa and Lahti, building a portion bread line in Lahti and a new dosing system and silos in Vantaa.

The recession was seen as a growth in the popularity of special offers and low-cost brands. In 2009, Fazer closed its bakeries in Tampere and Iisalmi, and the bakery in Jyväskylä was closed in January 2010. Closing the bakeries was part of Fazer Bakeries´ three-year business development programme which evaluated the efficiency and profitability of the bakery network and the location of bakeries as a whole.

Fazer´s confectionery business did well in Finland, and remained as a market leader. Challenging financial targets were achieved thanks to the increased sales of chocolate and chewing gum products and successful product launches. The Karl Fazer Nordic Gourmet line of chocolates was the most significant confectionery launch in years. In 2009, significant savings measures were also carried out. In 2009, in addition to the economic situation, the price fluctuations of raw ingredients – cocoa, milk and sugar – affected the business and increased prices.

The Group´s result in figures

Fazer Group´s turnover amounted to 1’441,1 million EUR in 2009 compared with 1’159,7 million EUR in 2008. The Group´s operating profit stood at 44,5 million EUR compared with 135 million EUR in 2008. A comparison with the previous year does not give a full picture of developments as Lantmännen Färskbröd was not included in the figures for 2008 and the figures for Fazer Konfektyr are noted in the result as an affiliated company. The comparable turnover fell by 8,8 percent compared with the previous year. The exchange rate effect accounted for around 55 percent of this reduction. The Group´s operating profit, excluding sales profits and losses, amounted to 45,5 million EUR compared with 44,6 million EUR in 2008.


Source: Fazer Group

Firm foundation in a weakened market situation

The weak real economy will affect Fazer´s business conditions on all of its markets in 2010. During the first half of the year, unemployment is expected to continue to rise, which will weaken the consumers´ buying power and increase sensitivity to prices. However, there are already indications that the industry is slowly starting to recover and that exports will increase, while consumer confidence for the future will strengthen. Fazer´s strength is that the Group has a powerful brand portfolio, skilled and motivated employees, good cash flow and a strong balance sheet.

«Fazer is well equipped for the future years. We have strong brands, skilled and motivated employees and a stable financial situation. The challenge for 2010 is to get the new organisation structure function efficiently, achieve the planned synergies and to meet our growth targets», says Group President Karsten Slotte.

Fazer´s business in different countries in 2009

The world-wide economic recession strongly affected Fazer´s business in 2009. The reduction in consumers´ purchasing power, increased price awareness and decreased consumption were portrayed as a fall-off in Fazer´s bread and confectionery sales and a strong decrease in sales of restaurants and cafes in all Fazer´s countries of operation. The economic recession affected Fazer´s business the most in the Baltic States and Russia because of declining currency value. Position in Baltic and in Russian markets was even strengthened. Despite the changes in the operating environment, Fazer Group as a whole reached good operative results. As from 01 January 2010, Fazer Group has had two business areas: Fazer Food Services and Fazer Bakeries + Confectionery.

Fazer Food Services´ results varied between countries

Fazer Food Services is the leading catering service expert in the Nordic and Baltic countries which offers good food and customer-oriented service solutions. Fazer Food Services operates almost 1’400 restaurants in Finland, Sweden, Norway, Denmark, Estonia, Latvia and Russia.

The turnover of Fazer Food Services decreased by 6,3 percent and was 536,1 million EUR (572,1 million EUR in 2008). The customer companies´ reductions in operations especially affected the contract catering service operations. The recession had the strongest effects on the catering service business in the Baltic countries. In Norway and Denmark, the results developed positively. Taking into account the economic situation, the result of the business area was satisfactory as a whole.

Fazer Bakeries + Confectionery reached positive results

Fazer Bakeries + Confectionery is Fazer´s new business area that started operations on 01 January 2010. With the organisational change, Fazer makes its operations more efficient than before and enhances its abilities to reform and change within the altered operating environment. The goal is to strengthen Fazer´s brands and to find new ways and places to meet the consumers and to open new forms of co-operation with customers and other partners.

Fazer Bakeries + Confectionery developed positively as a whole. The total turnover of the business area was 905,0 million EUR (587,6 million EUR in 2008). The figures also include Fazer´s bakery operations in Russia.

Fazer´s bakery operations were very successful. The turnover increased by 22,4 percent and was 446,8 million EUR (365,1 million EUR in 2008). The bakery operations were the most successful in Finland. In the Baltic countries, Fazer strengthened its market position. In addition, the result of Fazer Mill + Mixes was good.

The turnover of the confectionery operations was 270,9 million EUR in 2009. The turnover did not reach the objective, but the result was achieved with cost savings and the strong market share.

Fazer´s operations in Russia suffered from the poor exchange rate of the rouble and the decrease in volumes. The turnover decreased by 15,8 percent and was 187,3 million EUR (222,5 million EUR in 2008). Measured in roubles, the result reached the level of 2008 and in addition, Fazer managed to grow its market share both in the St Petersburg and Moscow regions.

About Fazer

The origins of Fazer Group lie in a family company founded in 1891 when Karl Fazer opened his first cafe in Helsinki. Today the Group offers meals, bakery and confectionery products and operates in a total of eight countries. Its operations are based on passion for customer, quality excellence and team spirit. The Group operates in two business areas which are committed to creating taste sensations: Fazer Amica and Fazer Bakeries + Confectionery. Fazer Group‘s turnover for 2009 was over 1.4 billion EUR. The Group employed ca 17,000 people in 2009.

Fazer Food Services is a leading contract catering company in the Nordic and the Baltic countries, offering customers delicious food and tailor-made service solutions. Fazer Amica has almost 1,400 restaurants in the Finland, Sweden, Norway, Denmark, Estonia, Latvia and Russia.

Fazer Bakeries + Confectionery is Finland’s leading bakery company and one of the leading companies in the Baltic Sea region and Russia. Bakery products are manufactured in Finland, Sweden, Estonia, Latvia, Lithuania and Russia, where Fazer operates under the name Hlebny Dom. In confectionery business Fazer Bakeries + Confectionery also is Finland´s leading company and a strong player in the Baltic Sea region. The confectionery factories are located in Finland: in Vantaa (chocolate products), Lappeenranta (sugar confectionery) and Karkkila (chewing gum).
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