Helsinki / FI. (fg) 2016 was a year of festivities, investments and renewal for Finland’s Fazer Group. The company celebrated its 125-year journey, but it also looked forward and planned for the future. Fazer increased its production capacity and expanded its offering with several new products. The Group’s net sales increased, and its operating profit improved by 19 percent from the previous year. Fazer worked towards enhancing the sustainability of its value chain and reached its goal of 100 percent responsible cocoa in the beginning of 2017. In March 2017, Fazer acquired Finnish Bioferme and established a new business area, Fazer Lifestyle Foods.
All Fazer’s business areas delivered in 2016. The company continued to improve its performance, with profitable growth as the key target of the year. Fazer Group’s net sales increased by 2 percent in 2016, amounting to 1’603.5 million EUR. The Group’s operating profit before amortisation of goodwill amounted to 87.7 million EUR and its operating profit was 52.7 million EUR – an increase of 19 percent compared to 2015.
In 2016, Fazer invested in new production capacity and in enhancing its offering, as well as in the continued development of the Fazer brand experience. The Group’s investments totalled nearly 105 million EUR. Fazer continued investing in oats by acquiring the Frebaco mill in Sweden and by doubling its oats production capacity in Finland. In June, Fazer bought the Keisari artisanal bakery in Finland. The company also declared its long-term intention to build a new bakery in the St Petersburg region.
Christoph Vitzthum, President + CEO of the Fazer Group says: «We are in the process of renewing and developing Fazer’s businesses into even more efficient, world-class operations in order to grow and enable international expansion. This efficiency boost is driven by our High Performance Culture, built around Fazer behaviours – engaging, developing and performing. With an enhanced focus on the quality of products and services, the environmental impact of our operations and the health and safety of our employees, we also keep improving Fazer’s operational excellence».
In 2016, Fazer celebrated its 125-year history by opening the Fazer Experience visitor centre and launching the 125 Opportunities for Working Life campaign. The success of Fazer Experience demonstrates the interest people have for Fazer’s operations and history. Tours are very popular and the feedback is excellent. The 125 Opportunities for Working Life campaign aims to help people who have difficulty finding employment to develop their working skills. Fazer’s goal is to be able to offer employment to at least 70 percent of the participants after the programme.
Business area overview
Fazer Bakery: For Fazer Bakery, creating a winning product portfolio with increased resource efficiency was in focus in 2016. Fazer Bakery improved its market position in Finland, Russia and Estonia. The Fazer Root Vegetable Bread was internationally recognised in October 2016 in the Gama Innovation Awards, in which it won the Positioning category as the top new launch. The increasing popularity of artisanal bread creates possibilities for growth, and Fazer is strongly investing strongly in this category.
Confectionery: Confectionery sales for 2016 were clearly above the prior year in nearly all markets. Fazer Confectionery’s renewed portfolio strategy has a strong focus on chocolate. The success of tablets under the Karl Fazer flagship brand, as well as that of the new innovative Karl Fazer Travel series launched at the beginning of the year, show that the strategy is working well. The portfolio strategy is supported by the development of new design, digital and shopper capabilities.
Fazer Food Services: Fazer Food Services continued its profitable growth in 2016. Fazer was able to retain important customers while winning a number of new contracts, securing top line growth in key sectors. Operational performance improved in Finland, Sweden and Norway, and Denmark reached its highest net sales in history. Fazer Food Services focused on specific sectors within three clusters – Business, Concession and Public – in order to drive customer and guest orientation.
Fazer Mills: For Fazer Mills, 2016 was a success in many ways. Major investments were made, and the business evolved well. Net sales grew despite declining grain prices, thanks to increasing oats and special ingredient exports. An increasing share of higher value segment products as well as successful launches of new products provided added value for customers and consumers, helping Fazer Mills to reach a sound financial result.
Fazer Cafés: Fazer Cafés operates in Finland, where the café market grew in 2016, with new players entering the market. Despite tightening competition, Fazer Cafés was able to increase comparable sales and significantly improve its profitability remarkably, primarily due to a refreshed portfolio and improvements in efficiency.
Responsible operations throughout the Group
In 2016, Fazer’s corporate responsibility work focused on, among other things, increasing the share of responsible cocoa – reaching the milestone of 100 percent responsible cocoa in the beginning of 2017.
Fazer also promoted the use of vegetables by creating a Nudging handbook and carrying out actions relating to the More Greens campaign, developed new bakery products that support well-being and carried out Human Rights Impact Assessments in the Group and in Fazer Confectionery.
A new health-related programme, Fazer Brainhow, was initiated to explore the connection between nutrition and cognitive performance.
The celebration continues
Finland celebrates its 100th anniversary in 2017. Fazer has seen the entire journey of Finland as an independent country, and Fazer is one of the main partners of the centenary celebration Finland100. Christoph Vitzthum says:
«We are happy to celebrate Finland’s anniversary. We also see it as a business opportunity and a way to strengthen Fazer’s image as a successful and responsible company. We want to increase our cooperation with relevant stakeholders and tell our story through our products, services and concrete actions. We will also celebrate Finland with our neighbours and friends internationally». Although the business environment remains challenging, 2017 will also be a year of new possibilities and growth. Fazer Group continued executing its growth strategy and investing in oats by acquiring Bioferme Oy, an expert in fermented oat products. With this acquisition, Fazer obtained the consumer brand Yosa and entered a new product category and market. To enhance its growth and internationalisation, Fazer established a new business area, Fazer Lifestyle Foods, which will focus on non-dairy grain products, plant-based meals and on-the-go snacking.
«We are continuing our growth strategy and are set for internationalisation with a new business area, Fazer Lifestyle Foods. We proceed with developing the Group towards a modern, sustainable food company, building on high-quality nutrition and adjacent new businesses. We see great opportunities for the new business area. Our ambition is to significantly grow this business with a broad international focus», Christoph Vitzthum concludes.
While the focus for the year is on profitable growth, Fazer will also continue to work on strengthening the company’s competitiveness and improving efficiencies.
Summary of Fazer’s performance in 2016
- Fazer Group’s net sales totalled 1’603.5 million EUR; a 2 percent increase from 2015
- Operating profit amounted to 52.7 million EUR; 19 percent higher than in 2015
- Cash flow from operating activities was 120.9 million EUR and gross investments amounted to 104.6 million EUR
- Interest-bearing net debt totalled -17.6 million EUR (net debt free) at the end of the year
- The Group’s equity ratio increased by 1 percent to 57.1 percent
- At the end of 2016, 14’876 people were employed at Fazer
