Fazer: performs well in a turbulent environment 2022

Helsinki / FI. (fg) Financial information in this information is derived from Fazer Group’s consolidated financial statements, which are prepared in accordance with the International Financial Reporting Standards (IFRS). The financial information in this release is unaudited. The 2022 financial statements will be published in week 12.

In the beginning of March 2022, Fazer announced its intention to exit operations in Russia. The sale of Fazer’s Russian business operations was completed in April 2022. As a result, the Russian operations are classified as discontinued operations in 2022 and presented as a single line item in the consolidated income statement. Comparative period has been re-presented accordingly. Figures in brackets, unless otherwise stated, refer to the same period previous year. Highlights:

January to December 2022 Highlights

  • Net sales increased by 13 percent to EUR 1,122.2 million (991.9).
  • Comparable Ebitda decreased by 10 percent to EUR 101.4 million (112.4). The comparable Ebitda margin was 9.0 percent (11.3 percent). Ebitda increased by 16 percent to EUR 106.3 million (91.6).
  • Items affecting comparability in Ebitda totalled EUR 4.9 million (-20.8) and were mainly related to the capital gains from real estate divestments. In 2021, items affecting comparability in Ebitda were exceptionally high mainly driven by transformation programmes in Fazer Bakery Sweden and Fazer Lifestyle Foods.
  • Comparable operating profit decreased by 35 percent to EUR 34.4 million (53.0), which represents 3.1 percent of net sales (5.3 percent). Operating profit increased by 29 percent to EUR 39.3 million (30.6).
  • Items affecting comparability in Ebit totalled EUR 4.9 million (-22.4).
  • Cash flow from operating activities totalled EUR 72.7 million (77.5).

January to December 2022 Key Figures – Continuing Operations

(in million EUR or as indicated) 01–12/2022 01–12/2021 Change
Net sales 1,122.2 991.9 13%
Comparable Ebitda 101.4 112.4 -10%
Comparable Ebitda margin 9.0% 11.3%
Items affecting comparability in Ebitda 4.9 -20.8 123%
Ebitda 106.3 91.6 16%
Ebitda margin 9.5% 9.2%
Comparable operating profit 34.4 53.0 -35%
Comparable operating profit margin 3.1% 5.3%
Items affecting comparability in operating profit 4.9 -22.4 122%
Operating profit 39.3 30.6 29%
Operating profit margin 3.5% 3.1%
Result before taxes 38.2 36.2 6%
Result for the period, continued operations 34.2 24.5 40%
Result for the period, discontinued operations -18.0 7.6 -236%
Result for the period 16.2 32.0 -49%
Cash flow from operating activities 72.7 77.5 -6%
Capital expenditure 59.9 82.1 -27%
Net debt 78.3 -95.2 -182%
Gearing ratio, % 9.9% -10.9%
Return on equity (ROE), % 1.9% 3.5%
Equity ratio, % 65.4% 68.3%
Return on capital employed (ROCE), % 4.0% 3.0%
Personnel, average* 4,990 4,891 2%
Personnel, end of period* 4,875 4,711 3%
[*] All personnel figures are presented as number of full-time equivalents (FTE).

Fazer Group’s President And CEO Christoph Vitzthum

«Fazer performed well in 2022 in an operating environment reflected by soaring inflation, global supply chain challenges, and uncertainty regarding the war in Ukraine. Throughout the year, we cooperated closely with all key stakeholders, suppliers, and customers to ensure security of supply, business continuity and the profitability of our operations and the whole value chain. Our net sales increased by 13 percent, mainly driven by price increases and non-organic growth from the Trensums Food acquisition. Net sales in all three business areas increased, and overall performance remained solid. We were able to absorb the biggest cost inflation impacts with price increases, and although increases were realised with a delay, we managed to defend our profitability. I would like to thank all our employees and stakeholders for the work well done under these extremely challenging conditions. I am encouraged by the agility and flexibility of our people, and confident that we can continue to capture positive opportunities also in 2023.

«Our decision to end all operations in Russia and to exit the country was a major event for Fazer in 2022. We managed to sell the Russian subsidiary quickly and were among the first western companies to exit the market. The divestment heavily impacted the Group’s result for 2022 which decreased by 49 percent. Russia’s attack on Ukraine also triggered an energy crisis of magnitudes not seen in decades, causing problems especially in the natural gas and electricity markets. Consequently, the energy markets were extremely volatile and unpredictable, and peaking electricity prices and availability issues severely impacted all our businesses throughout the year. As the majority of thermal energy used in our bakeries in Finland and the Baltics is provided by natural gas, the issue was particularly challenging for our bakery operations. We reacted swiftly and invested in oil-fuelled back-up equipment for most bakery lines in order to mitigate the risk of energy supply disruptions. The need for the back-up equipment was, however, minimal during the year, and I am very pleased that we were able to fulfil all our customer commitments uninterruptedly and that our delivery accuracy maintained the very high standard our customers are used to. Despite the highly challenging environment, we continued to develop our businesses and to invest in the company, reaching many milestones during the year. The project to build a state-of-the-art confectionery factory in Finland proceeded, and in May 2022, we signed a cooperation agreement with the city of Lahti. If realised, this investment is the biggest in company, and also Finnish food industry history. In Fazer Bakery, we responded to the increased demand for oat products by expanding our capacity with an investment in a state-of-the-art oat bread production line at our bakery in Vantaa, Finland. In Fazer Lifestyle Foods, we finalised our acquisition of the Swedish plant-based drink producer Trensums Food as well as the investment to increase our oat capacity in Koria, Finland. Our xylitol factory in Lahti started its commercial operations during the year. In 2022, we opened 13 new shop-in-shop bakeries in Finland, and 3 new shop-in-shops in Estonia and started a pilot in Sweden. In Fazer Retail, several Fazer Cafés were opened in Finland and Gateau bakery shops in Sweden.

«During the year, the source of consumer concerns quickly shifted from the pandemic to the invasion of Ukraine and rapidly rising prices, and households are now facing increasing financial pressure. There are clear signs of changes in consumer behaviour, with increased price-consciousness at its core. With the strength of our brand, investments in our business, and our proven ability to respond to rapid change, I believe we are well equipped to respond to changing consumer demands, and at the same time, to remain resilient to the current challenges. We expect the market environment to remain challenging for at least the first half of 2023. Uncertainty remains high in the commodity and energy markets and general visibility is low. In 2023, we will continue to focus on efficiency and agility without losing sight on our long-term strategic priorities.»

Outlook FY-2023

The markets are expected to continue challenging at least for the first half of 2023. The uncertainty in the commodity and energy markets continues, and raw material, packaging material and energy prices are expected to remain volatile. Simultaneously, consumer purchasing power is decreasing with increasing price sensitivity as a result. All in all, visibility is low, and it is uncertain whether agreed and targeted customer price increases will be able to fully absorb the impacts from high cost inflation. With the strength of the Fazer brand and the ability to respond to rapid change, Fazer is well equipped to respond to consumer demands and show resilience in a challenging environment.

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