Lembeke / BE. (lbbv) In 2020, Belgium’s Lotus Bakeries Group reached a consolidated turnover of EUR 663.3 million, representing a growth of 8.3 percent. The growth in the first half of the year therefore continued in the second half. Without negative exchange rate effects, turnover growth in 2020 would have been 9 percent. In the final quarter, there was also increased demand for stock building among customers in the United Kingdom. This was due to the uncertain outcome of the Brexit negotiations and possible problems at the border.
This solid growth is mainly due to double-digit growth for Lotus «Biscoff», the Group’s first and largest strategic pillar. The international expansion of «Lotus Biscoff», «Lotus Biscoff» Spread and «Lotus Biscoff» Ice Cream accelerated once more this year with substantial increases in the level of penetration in many countries.
The growth of «Biscoff» was also supported by two successful innovations. In the first half of 2020, «Biscoff» Sandwich Cookie went on sale. Following an initial launch in four countries, «Biscoff» Sandwich Cookie is now being rolled out globally. To that end, the new, state-of-the-art «Biscoff» Sandwich Cookie production line in Lembeke recently came on line – one of the key investments in 2020. In the second half of the year, Lotus Bakeries made its debut in the chocolate category. As of September, «Lotus Biscoff» Chocolate is available in Belgian supermarkets and has proved an instant hit with consumers.
«Biscoff» experienced strong global growth in all countries and continents in 2020. Growth was realised both in Lotus Bakeries’ traditional major markets and in several promising newer markets for the Group, namely Australia, Indonesia, Malaysia, United Arab Emirates, Morocco, Egypt, Türkiye and Canada. «Biscoff» saw slightly slower growth in countries with more significant share of sales in the out-of-home channel. They were obviously hit by the negative impact of the pandemic and the introduction of lockdowns. The out-of-home channel comprises all sales, direct or indirect, to cafes and cafeterias, airlines, hotels, restaurants, cruise ships, cinemas, events, theme parks, schools, hospitals, et cetera.
Lotus Bakeries’ second strategic pillar is natural snacking within Natural Foods. After a very strong first quarter, sales of Natural Foods brands «Nàkd», «Trek» and «Bear» fell sharply with the introduction of lockdowns. All products for which on-the-go is a significant consumption moment were affected by the closure of offices and schools and the restriction of travel to work, to visit Family or out of the home. From July, the Natural Foods brands recovered significantly and systematically to 2019 levels. «Kiddylicious» achieved good growth in 2020, due partly to internationalisation and the success in the UK of its innovations, Juicy Fruit Bars, Melty Buttons + Rice Crispy Sticks. The «Bear» brand also experienced an increase in turnover in 2020, driven by strong growth in the US and a strong third quarter in the UK.
The third pillar of the Lotus Bakeries strategy is the focus on «local heroes» in the home markets of Belgium, the Netherlands, France and Sweden. Within this pillar of local specialities, «Annas Pepparkakor» achieved remarkable growth of more than 20 percent this year. This makes Annas the undisputed market leader in Sweden in the pepparkakor category, a cookie that is traditionally consumed over the Christmas period. The exceptional growth this year is the result of strong sales of the biscuit range, aided by the successful launch of the new «Annas Pepparkakor» ice cream.
In Belgium, Lotus grew its already high market share and general level of household penetration even further. Besides «Biscoff», the «hero» products in the waffle and cake ranges also recorded solid growth. Waffles were supported by a new media campaign for Suzy in the second half of the year. There were also product innovations with Blueberry «Tartélice» and Lotus honey waffle.
In the Netherlands, during the first few months of 2020, «Peijnenburg» focussed strongly on the introduction of the new packaging design and the launch of the new media campaign starring Dutch singer Frans Bauer, with the baseline «Van Happen word je Happie» (Eating «Peijnenburg» makes you happy). With the outbreak of the pandemic, the campaign was temporarily paused, but since November «Peijnenburg» is back on TV. The campaigns to revive growth in the gingerbread category and for the «Peijnenburg» brand are starting to bear Fruit. As a result, «Peijnenburg» recorded slight growth again in 2020. Also in the Netherlands, the on-the-go gingerbread brand «Snelle Jelle» experienced the negative impact of the lockdowns.
In France, waffles continued to grow unabated in 2020, supported partly by the Liege milk chocolate waffle, which was launched in the second half of 2019.
Recurrent operating cash flow risies by almost 10 percent
In 2020, Lotus Bakeries achieved a recurrent operating result (Rebit) of EUR 111.1 million and a recurrent operating cash flow (Rebitda) of EUR 135.7 million. Both profitability parameters rose, by EUR 8.2 million and EUR 12.1 million respectively.
The turnover and volume growth bring about a positive sales and operating margin contribution. While the Group still invested strongly in media support for Biscofff’ in Belgium, France, the UK and Spain, for «Nàkd» in the UK and Belgium, for «Peijnenburg» in the Netherlands and for waffles and cakes in France and Belgium during the first quarter, the campaigns were suspended temporarily on the announcement of the first lockdowns. During the second half of the year, certain media campaigns were relaunched and new commercials were developed for 2021.
Year on year, depreciation charges increased by EUR 3.7 million, mainly due to the Factory in the US. The Lotus «Biscoff» factory in the US has been operational since August last year and will scale up further in 2021. The «Bear» factory in South Africa officially became part of the Group in the second half of 2019. In 2020, this factory made a positive contribution to results thanks to growing volumes and a strong operating performance.
The non-recurrent operating result amounts to EUR -4.6 million and is primarily made up of Covid-19 related costs in order to guarantee continuity and safety in the factories. In addition, further expenses were incurred in the first half of the year in the US to support the «Biscoff» factory and for the installation and start-up of the «Bear» packaging line.
The financial result of EUR -3 million consists primarily of interest expenses and foreign exchange results on balance sheet positions held in foreign currencies. Interest expenses fell year on year due to the refinancing of long-term debt at the end of 2019.
The tax expense decreased to EUR 21 million or 20.3 percent of the profit before taxes. The release From deferred taxes on the Foreign exchange result arising on the repayment of an inter-company debt had a positive impact to reduce the tax expense. The tax expense also includes a negative impact on deferred taxes as a result of the roll-back of the corporate tax income rate reduction proposed in 2021 in the Netherlands. These deferred tax effects are purely accounting transactions and of a non-cash nature.
In addition to the effects mentioned above, the completion of a Mutual Agreement Procedure also had a more limited positive effect on tax expense. This led to the realised exemption from double taxation that arose on reaching an agreement with the tax authorities in Belgium, the Netherlands and France several years ago. This agreement concerns remuneration for purchasing activities which have been centralised in Switzerland for more than ten years. In this agreement, a consensus was also reached as to the remuneration method to be used. This remuneration method had already been in place since 2018. The recurrent net profit rose by more than 11 percent to EUR 86.2 million or 13 percent of turnover. The net profit increased by 9 percent to EUR 82.6 million.
Net financial debt falls by EUR 60 million
Over the last 12 months, Lotus Bakeries generated a new record operating cash flow of EUR 132 million. During this period, the company also invested in the acquisition of almost all shares in Natural Balance Foods and the first «Biscoff» Sandwich Cookie line in Belgium. Net financial debt fell to EUR 111 million at the end of 2020, a decrease of EUR 60 million compared to the end of June 2020. As a result, the net Financial debt/Rebitda ratio fell to 0.8 compared to 1.4 at the end of June 2020.
The reported Financial debt of EUR 118 million includes EUR 8 million additional debt which must be expressed in accordance with the IFRS 16 Leases standard.
For additional information please read the company’s PDF file below (216 KB):
20210210-LOTUS-FY-2020.