Vivartia: Food service saved the day – Revenue Growth and Marginal Profits – The Plan for 2022

The return to normality with the opening of stores in the food service sector saved the day for the Vivartia group, which from March 2021 is controlled by the American fund CVC Capital represented by Alex Fotakidis.

For 2021, the group’s sales amounted to 591.9 million euros, increased by 7.9% compared to 2020, mainly due to the contribution of the upward turnover of the food service industry (+30.3 million euros), as shown by the financial statements for the previous financial year.

In particular, the gradual lifting of restrictive measures to deal with the pandemic improved the group’s sales by 43.7 million euros compared to the previous year.

On the contrary, the strong upward trends in energy and raw material prices burdened operating costs, with the result that profitability before taxes, interest, depreciation and financial results remained at levels corresponding to 2020, at 43.3 million euros.

The financial results showed a 23% decrease compared to 2020 (15.5 million euros in 2021 versus 20.1 million euros in 2020), a consequence of the restructuring of the group’s bank lending, while, after the impairment of fixed assets and brands and the sale of holdings, the total net financial expenses amounted to 17.8 million euros.

Marginal gains despite losses

It is worth mentioning that the pre-tax results amounted to losses of 0.9 million against losses of 13.4 million euros in 2020, while the income tax for the 2021 financial year was also significantly reduced, which amounted to an income of 1.3 million against disbursements of 3.2 million euros for FY 2020, which came mainly from the reduction of the tax rate from 24% to 22% in 2021.

As a result of the above, the group showed marginal profits after taxes of €0.3 million for FY 2021, compared to losses of €16.6 million in 2020.

Loans

It is also important that the group recognized in the Consolidated Statement of Results for the year 01/01-31/12/2021 an amount of 4.087 million euros. which reflects changes or discounts on rents as a result of the spread of Covid-19.

The cash reserves of the group on 31/12/2021 amounted to 71.2 million euros from 45.3 million euros, mainly affected by the sale of the group’s participation in the MEVGAL company, while its total borrowings amounted to 425, 9 million euros against 418.7 million euros. The change is related to the reduction in borrowing that resulted from the restructuring of the group’s debt and to a new loan received by the company Michael Arabatzis SA.

Disposable income and sales risk

“A key factor that can negatively affect the sales growth of all branches of the Vivartia group is the disposable income of consumers, which is significantly affected either by fiscal measures or by intense inflationary pressures”, financial statements for 2022 prospects point out.

At the same time, issues of price appreciation and demand for sensitive raw materials such as feed, seeds and milk production have caused international turmoil, according to Vivartia management. As it notes, it is closely monitors the fluctuation of prices and has developed an action plan (increasing prices, restraining cost functions, etc.) with the aim of minimizing the impact of price increases on the group’s results.

Strategic plan

In this highly volatile environment, the group’s management is monitoring daily developments and at the same time implementing its medium-long-term strategic plan, the main axes of which are:

– Maintaining and strengthening the leadership position of all its sectors in Greece, through the development and strengthening of their networks and through new product initiatives and innovations.

– Continuously upgrading the consumer experience through digital innovation and increasing customer loyalty levels, through tools and media that respond to modern consumer needs.

– Rationalization and optimization of the operational model, through targeted investment moves to reduce energy dependence and more effective management of operating costs.

– The further expansion of the presence of the group’s branches in wider geographical areas of interest by entering into partnerships with strategic partners.

– The further development and strengthening of the Group through targeted strategic moves that will lead to the creation of added value for all interested parties.

Sale of facilities in Tavros and Imathia

The acquisition of the shares of the company Daniel S. Gatenios & Sons SA. by VIVARTIA subsidiary DELTA which was completed on March 8, 2022, for a price of 16.3 million euros, is a step in this direction.

In addition, the agreements for the transfer of DELTA’s facilities in Tavros Attica and Plati Imathia, sales that will be completed by the end of the current fiscal year, as well as the completion of the acquisition of the minority stake in Vivartia Participations SA by VENETIKO HOLDINGS A.E. are moves that are part of the strategy for further strengthening and expansion of the group.

Dairy Products

Sales of the dairy sector during the 2021 fiscal year increased by 1.6% and amounted to 279.6 million euros as against 275 million euros in 2020.

The sector maintained its leading market shares in almost all the product categories it’s active in, while it is worth noting that in categories such as plant-based drinks, fruit and cereal yogurts, baby yogurt and tea, it showed significant share growth.

The published earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to 16.7 million euros in 2021, reduced by 7.8 million compared to 2020, significantly affected by the increases in raw material and energy prices. Pre-applicability of International Financial Reporting Standards(IFRS) 16 decreased by 8.1 million and amounted to 14.1 million euros

It is noted that EBITDA has been affected by non-recurring costs related to restructuring movements of the organization and its production structures amounting to 1.9 million euros.

Sales of the Dairy Branch outside Greece amounted to 71.2 million euros, up by 12.2% compared to the previous year due to performance optimization in key countries of operation with new products and also due to dynamic entry into new promising markets.

In particular, the parent company’s exports continued the upward trend of recent years, presenting an increase of approximately 24.5% in turnover compared to 2020.

Accordingly, the branch’s subsidiary in Bulgaria maintained the positive course of sales growth of 9.1%, which amounted to 52.5 million euros (48.1 million in 2020).

Focus

The catering sector of Vivartia, deeply affected by the gradual lifting of the restrictive measures of the COVID – 19 pandemic in the financial year 2020, showed a recovery in its turnover in the financial year 2021 by 30.2 million euros (+26.6%) and came to 143.6 million euros compared to the 113.4 million of FY 2020.

In particular, total net sales showed an increase compared to 2020 in all four main brands of the sector, which amounted to a) the Goody’s brand by 21.2%, b) the Flocafe brand by 32.3%, c) the Everest brand by 8.5%, and d) in the La Pasteria brand by 45.4%.

The published interest, taxes, depreciation, and amortization (EBITDA) amounted to 14.5 million euros in 2021, significantly increased by 11.7 million euros compared to 2020 (2.8 million) including IFRS 16. EBITDA before the application of IFRS 16 increased respectively by 10.7 million euros and amounted to 6.1 million euros.

The food service sector includes the chains of restaurants and cafés with the brands “Goody’s”, “Everest”, “La Pasteria”, “Kuzina”, “Papagallino”, “Flocafe” as well as the new concepts “Bistro dei Cavalieri, Forno Luca, Herbs & Olives and Grain De Ble, while at the same time it is also active in the provision of catering services.

Frozen Goods

In 2021, the frozen goods sector recorded an increase in turnover of 5.8% compared to the previous year, which amounted to 171.3 million euros compared to 161.9 million euros in 2020.

The frozen goods sector strengthened its market share in value by 0.3% both in the vegetable category and by 1.5% in the fresh salads category, while it showed marginal losses in the frozen dough category (-0.5%).

In particular, the increase in sales for the two main companies in the frozen food industry amounted to 4.8% for BARBA STATHIS and 6.9% for M. ARABATZIS.

The published EBITDA amounted to 26.6 million in 2021 marginally up by 0.2 million (+0.8%) compared to 2020 (26.4 million) affected by the significant increase in energy and raw material costs.

EBITDA before the application of IFRS 16 increased respectively by 0.1 million and amounted to 25.8 million euros.

Exports in 2021 increased by 8.7% compared to 2020 and now represent 25.3% of the group’s sales. In detail, the increase in frozen vegetables was 13.7%, mainly coming from the markets of Italy and the United Kingdom, while for frozen doughs the increase reached 8.1%, coming from the markets of Europe.

This result is due to the continued growth of existing customers, cooperation with new customers and entry into new markets, strengthening the group’s presence in more than 46 countries.