Oetker-Group: More highs than lows in the Food Business Unit

Bielefeld / DE. (oe) Germany’s Oetker-Group closed the 2020 financial year on an overall decent note and in line with its expectations adjusted by the Corona pandemic, despite in some cases significant declines in sales in individual business units. The «Food», «Beer and Non-Alcoholic Beverages, Sparkling Wine, Wine and Spirits» and «Other Interests» business units achieved consolidated net sales of 7,330 million EUR. Interested parties can find the full media release on the performance of all segments on the company server. Of interest here is exclusively the Food Business Unit as follows:

Business unit increases bottom line by 6.5 percent

The Food Division is comprised of the companies in the Dr. Oetker Group including Conditorei Coppenrath + Wiese and Martin Braun. During financial year 2020 it generated total sales of EUR 4,137 million and thus grew by 6.5 percent in the reporting year. Adjusted for the effects of changes in the scope of consolidation and exchange rates, sales growth was 8.1 percent. Investments amounted to EUR 191 million (previous year: EUR 176 million). The division saw a 6.9 percent increase in the number of employees to 20,040 employees, mainly due to the year-round inclusion of the companies acquired in 2019. Without changes in the scope of consolidation, the number of employees rose by 3.7 percent.

In terms of acquisitions, the focus in 2020 was primarily on the continued integration of the companies acquired in previous years. In addition, smaller companies were acquired that complemented organic growth: As of July 30, 2020, the shares in InterNestor GmbH, an online provider of home-baked individualized gateaux, were increased from 49 to 100 percent. With economic effect from December 31, 2020, Dr. Oetker acquired NewCakes B.V., the European market leader in multi-brand Specialty Store Cakes in the Netherlands.

After a solid start to the year in January 2020 across all product ranges and countries, the corona pandemic had a major impact on business in all areas from February onwards. On the one hand, all activities related to out-of- home consumption have collapsed. On the other hand, the Group’s Food division was simultaneously confronted with strong and unexpected demand across many retail ranges in the first half of the year. The expenses and hygiene measures necessary to ensure supply capability resulted in a high cost burden.

In the Cakes and Desserts category, Dr. Oetker achieved significant net sales growth compared with the previous year, benefiting in particular from business with baking ingredients. Baking mixes, chilled desserts, ready-to- use dry products and frozen cakes also recorded double-digit percentage growth over the course of the year as a whole. The Pizza category participated in the increased consumption of pizza products for home consumption. Due to the growth rates, La Mia Grande, which was launched in the previous year, and the frozen snacks Intermezzo, which was also launched in 2019, as well as the already established Chicago Town Range, deserve a special mention. Developments in the Professional division went against this positive trend. Following a sharp drop in business in the first months of the pandemic due to the well-documented Lockdown measures and the considerable restrictions imposed by hygiene precautions, slight improvements were achieved in the second half of the year, although these were not sufficient to match the previous year’s level.

A regional analysis also essentially reflects the effects of the corona pandemic: The retail product ranges increased, while Out-of-Home consumption and the Professional markets slumped. The Germany and Western Europe regions benefited from solid sales in the retail ranges with weak professional sales. This pleasing development was strongly driven by the two strategic categories of Pizza and Cakes and Desserts, with the powder- based ranges in particular contributing to the increase in sales.

Dr. Oetker also recorded strong year-on-year growth after adjusting for currency effects in the Eastern Europe region. However, this organic increase in sales was weakened by negative effects from the massive devaluation of Eastern European currencies in some cases.

In the Americas region, the impact of the pandemic was felt more strongly than in Europe. Sales in Euros were slightly higher than in the previous year, but after adjusting for foreign exchange were significantly higher than in 2019. The national company in Canada achieved double-digit growth rates in local currency, primarily due to its successful pizza range. Dr. Oetker Brazil also showed very good development in the cake and dessert segment in 2020. By contrast, the Mavalério and Wilton companies were strongly negatively affected: The Lockdown and the resulting closure of the important Craft Stores in the USA and the Party Stores in Brazil led to a drop in sales. Business performance in Africa, Asia and Australia was largely driven by growth in the Cake and Dessert category. The strong performance of the national companies in Egypt, Tunisia, Morocco, Australia and India is wor- thy of particular mention.

Conditorei Coppenrath + Wiese was able to increase its sales revenue by 5.7 percent in 2020. The increase in sales resulted primarily from the pleasing performance of the branded business in Germany, mainly as a result of the strong performance of the strategic segments of sheet cakes and rolls and small cakes, rolls and strudels. The cake business weakened due to the corona-related contact restrictions and the associated lack of occasions for consumption. In business with Great Britain, burdens from the continued unfavourable exchange rate of the British pound to the Euro were partially offset by positive deviations in raw material costs and an active product range policy.

With a total of EUR 156 million, the investments of all companies of Dr. Oetker and Conditorei Coppenrath + Wiese in 2020 were above the previous year’s level (EUR 149 million). The companies have thus laid the foundations for additional growth in the coming years and ensure state-of- the-art technology and high-quality processes throughout the supply chain. In this context, for example, major investments were made in new production lines or warehouse expansions at the Dr. Oetker production locations in Germany, Poland, South Africa and Brazil. In order to continue expanding capacity, Conditorei Coppenrath + Wiese also made investments in further production lines for rolls and cheesecake and in new production technology for cakes in the past financial year.

In the 2020 financial year, the Martin Braun-Group was unable to con- tinue the growth process that had been taking place over many years and had to report a significant decline in sales of 13.1. In addition, negative cur- rency effects, especially the devaluation of the Turkish lira, had a negative impact on the development of sales. Adjusted for currency effects, the or- ganic change in sales was minus 11.4 percent. In the first three months of the corona crisis in 2020, bakeries and food service were severely affected worldwide and many customers in numerous countries had closed com- pletely. The second corona wave in autumn brought with it numerous addi- tional local and national lockdowns in the target markets. With the aid of a comprehensive package of measures, the Group responded to the difficult market conditions and was thus able to mitigate part of the decline in sales.