Organic sales growth by 4.5 percent
<Bielefeld, May 15, 2020> The Dr. Oetker food companies increased sales to around 3.4 billion euros in the 2019 financial year and thus grew nominally by 12.3 percent. Adjusted for consolidated companies and exchange rate effects, growth was 4.5 percent. Also the companies showed overall positive market share gains in stagnant markets.
With several major acquisitions abroad, Dr. Oetker further expanded its international market position around the strategic themes cake/ dessert and pizza. Conditorei Coppenrath & Wiese primarily grew with numerous new product launches.
FINANCIAL YEAR 2019
“Against the background of a weakening global economy, the 2019 financial year once again proved to be very challenging, both politically and economically. Nevertheless, we primarily further expanded our international business with several acquisitions this year and at the same time successfully continued our strategic focus on the cake/ dessert and pizza segments in all countries – thanks to organic growth and positive market share gains,“ explains Dr. Albert Christmann, Chairman of the Dr. Oetker Management Board, at the disclosure of the annual key figures.
Operating on all continents the Dr. Oetker companies generated sales of € 3,390 billion in 2019 and were able to grow by 12.3 percent as compared to the previous year (€ 3,019 billion). Adjusted for consolidated companies and exchange rate effects, growth was 4.5 percent.
INTERNATIONALMARKETS AND ACQUISITIONS
In 2019, organic growth was supplemented by several acquisitions again. With effect from January 1, 2019 Dr. Oetker completed the acquisitions of Confetti in Finland and Bagetid in Denmark. Both companies operate an online platform for the distribution of various baking and decorating products from renowned manufacturers to end consumers. Confetti also has its own retail stores and is a franchisor for other businesses. With the acquisition of the Alsa brand business in France, the Netherlands, Belgium and Portugal as of March 1, 2019 and in Morocco as of October 1, 2019, Dr. Oetker has become the market leader in the French baked goods and dessert market. In July 2019, Dr. Oetker acquired the manufacturer Mavalério, which offers cake and dessert decorations for the Brazilian market and the pan-American export market.
REGIONAL DEVELOPMENT AT DR. OETKER
A regional analysis showed an increase in sales across all regions, albeit to varying degrees. It is gratifying that Dr. Oetker recorded significant growth on an adjusted basis above all in Germany and Eastern Europe and on an adjusted and acquisition-driven basis in America, Asia, Africa and Australia.
In Germany sales growth was based in particular on the good performance of bakery products, fresh and powdered desserts as well as pizza, frozen cakes, tarts and rolls. In contrast, business in muesli, on the professional sector and, due to weather conditions, in preserves fell slightly short of expectations.
The Western Europe region also recorded encouraging growth thanks to good sales in Belgium, the Netherlands and Portugal as well as in France, in particular due to the acquisition of Alsa. In addition, smaller acquisitions in new business models provided additional sales contributions. Despite adverse conditions in the UK due to the multiple postponement of Brexite, Dr. Oetker UK also contributed to revenue growth. In Denmark, on the other hand, declining sales had to be accepted due to differences of opinion in marketing the products.
Sales growth in the Eastern Europe region was driven in part by developments in Poland, both in the cake and dessert sector and in the pizza sector. In addition, Romania, the Czech Republic and Hungary, in particular, achieved solid organic growth.
The national companies in Mexico and Brazil also showed encouraging organic growth. Brazil also benefited from the acquisition of the baking decor manufacturer Mavalério. Overall, the Americas region recorded a sharp jump in sales compared with the previous year, also due to the full-year inclusion of sales from the Wilton business acquired in the USA in October 2018.
The Asia, Africa and Australia region benefited in particular from double-digit organic growth in India, South Africa and Korea. Added to this were the growth effects from the acquisition of Tag El Melouk in Egypt, which was completed in the previous year. By contrast, the distribution of new pizza products in Australia could not yet be expanded as planned. Dr. Oetker in Australia, for example, maintained its sales at the previous year's level.
INNOVATIONS AT DR. OETKER
One of the main reasons for the positive development of the division in the past financial year is the large number of relevant innovations in all product ranges and in many countries. In the cake and dessert sector, for example, Dr. Oetker launched the "Seelenwärmer", a creamy cup pudding on the German market that both satisfies consumer demand for convenience and meets the demand for one-person preparations. The “My Sweet Table” cake confectionary also successfully established itself on the market.
In the pizza sector, “La Mia Grande” met consumer taste in Germany and made positive market share gains. The raw dough pizza concept “Die Ofenfrische”/ “Casa di Mama” also developed quite well in many countries. The frozen snacks under the sub-brand “Intermezzo” with five new flavors were also successfully launched in Germany. In addition, the company has pushed ahead with the issues of salt reduction, the use of alternative raw materials for pizza bases and compliance with ecological and ethical standards for the raw materials used. In response to current consumer demand, Dr. Oetker has added crunchy muesli without added sugar or other sweeteners and porridge in various flavours to the Vitalis muesli range.
CONDITOREI COPPENRATH & WIESE
In 2019, Conditorei Coppenrath & Wiese was able to increase sales revenues by 6.1 percent. The increase in sales was primarily driven by the pleasing brand business in Germany, primarily because of the development of the core business of cakes and pastries and the strategic segments of sheet cakes and rolls. In the British export business, burdens from the continuing unfavorable exchange rate of the British pound against the euro were partially offset by positive deviations in raw material costs and an active product range policy. To continue the expansion of capacity, the company also invested in additional production lines for rolls and cheesecake as well as in a new production technology in the past financial year.
With regard to sales, customer relationships from the e-commerce sector are playing an increasingly important role for the company. In addition to the expansion of business relations in e-commerce, customer relations in traditional sales were also expanded and strengthened.
At a combined total of € 149 million, the investments of all Dr. Oetker companies in 2019 were at the previous year's level (€ 149 million).
This laid the foundations for additional growth in the coming years and ensured a state-of-the-art supply chain. In this context, major investments were made in new production lines or warehouse expansions at the production sites in Germany, South Africa and Canada, for example.
In the pizza sector, Dr. Oetker has expanded its factory and warehouse capacities, particularly at its international locations in the UK and Canada. In order to be able to serve the growing sales volumes of the Chicago Town brand both in the local market and in export, Dr. Oetker has added a line to its production in the UK. In Canada the company has expanded its raw materials warehouse. In addition, the construction of a new administration and social building, which was begun in 2018, was completed at the Wittlich site. In South Africa, the company is preparing to move into a larger location in 2020 due to capacity constraints. For the cake and dessert sectors, work on a new warehouse and a new social building was almost completed at the Romanian plant site.
Conditorei Coppenrath & Wiese devoted the majority of its investments to the further expansion of production at the Mettingen plant and the development of new products.
In 2019, the number of employees grew to 16,236. The companies employed 7,041 employees in Germany and 9,194 employees at foreign locations. This increase by a total of 1,350 employees resulted in particular from acquisition-related changes at Dr. Oetker. On the one hand, this mainly reflected the full-year inclusion of employees at Wilton in the USA and Tag El Melouk in Egypt. On the other hand, the annual average increased due to acquisitions in 2019, such as Mavalério in Brazil.
Before the global crisis measures to contain the Corona pandemic took effect, Dr. Oetker expected growth in 2020 to be at least in line with its strategy. The forecast was based on product innovations, the expansion of distribution in the growth regions of Asia, Africa and Australia, and the integration and further development of the companies acquired in 2019.
With the outbreak of the Covid 19 pandemic in the first quarter of 2020, the view of the future has changed. In production worldwide, but also in the administrative areas, extensive measures to protect employees were introduced at an early stage, and additional efforts to ensure supply availability were implemented in procurement. Since mid-March, Dr. Oetker Professional's large-scale consumer business has collapsed in all countries due to the closures of catering outlets caused by Corona. Other product ranges, such as the decor business, have also suffered losses. Volume and sales growth in the pizza and food business for domestic consumption at the beginning of the crisis in March and April is at least partly attributable to stockpiling.
”The completely uncertain course of the Corona pandemic makes it very difficult at the present time to make a valid forecast for the course of the 2020 financial year”, says Dr. Albert Christmann. “The expected considerable economic effects of the Corona crisis will also affect us as a food manufacturer. In all companies, we have therefore taken extensive measures at an early stage to compensate as far as possible for lost sales and to safeguard them by means of cost measures. Because in times like these, the saying ‘cash is king’ applies, the focus is also on all measures to preserve liquidity, in order to be able to seize business opportunities as they arise. We are therefore confident that Dr. Oetker will master both the crisis and the subsequent uncertainty and emerge from it stronger than before”, Dr. Christmann concludes.
Dr. August Oetker Nahrungsmittel KG
Dr. Jörg Schillinger
Tel.: +49 (0) 521/155-2619
Fax: +49 (0) 521/155-11-2619
Dr. August Oetker Nahrungsmittel KG
Tel.: +49 (0) 521/155-2349
Fax: +49 (0) 521/155-11-2349
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