Fazer reports a strong result in 2014, despite challenging operating environment
In 2014, Fazer continued to improve its performance, despite difficult market conditions. The Group’s net sales and operating profit fell slightly below 2013 levels but showed an improvement when measured with comparable foreign exchange rates.
Due to challenging business environment and especially the depreciated Russian rouble, Fazer Group’s net sales decreased by 2.8 per cent in 2014, amounting to 1,647.7 million euros. With comparable foreign exchange rates, net sales increased by 1.5 per cent. The Group’s operating profit before amortisation of goodwill amounted to 79.6 million euros and its operating profit was 43.3 million euros.
“2014 was a tough year, which was mostly due to the challenging operating environment. The unstable situation in Russia and the economic development in Finland made it difficult,” says Christoph Vitzthum, President & CEO of the Fazer Group.
Nevertheless, the Fazer Bakery and Fazer Food Services business increased in profitability. Fazer Confectionery, however, did not reach its targets.
At the beginning of 2014, Fazer’s strategy was updated, focusing on the transforming business environment as well as on customer and consumer needs. The new operating model and organisation, consisting of three business areas (Fazer Bakery, Fazer Food Services and Fazer Confectionery) and two separate business units (Fazer Mill & Mixes and Fazer Cafés), was implemented in April.
2014 was a challenging year in the bakery business as the total bread consumption continued to decline in most of Fazer’s bakery markets. However, strengthening of market share continued through innovative novelties, improving profitability where possible and lending focus to certain regions with high potential, such as Russia. Changes between categories happen swiftly, and unexpectedly high growth in the frozen bakery market represents a clear opportunity for Fazer.
In response to the changing business environment, Fazer Confectionery continued to develop within the growing snacking trend and introduced biscuits and ice creams under its strong confectionery brands, as well as other novelties. The company’s market share in Finland increased in chocolate tablets, with Karl Fazer 200g tablets and newly launched Fazer Pure Dark novelties being two particular highlights.
Fazer Food Services succeeded in achieving several major contracts in the Nordic region. The business area’s ambition is to shift from the role of contract caterer and take full advantage of future opportunities in new varieties of restaurants, meal solutions and segments to become a complete food service provider.
The company expects an increase in net sales and profitability in 2015 when measured with comparable exchange rates. “The world we live in is constantly undergoing dramatic changes,” says Christoph Vitzthum, “but we thrive on this: it motivates us to explore, to discover, and to create new taste sensations.”
Summary of Fazer’s performance in 2014
- Fazer Group’s net sales totalled 1,647.7 million euros; a three per cent decrease from 2013.
- Operating profit amounted to 43.3 million euros.
- Cash flow from operating activities was 130.4 million euros, a 13 per cent increase from 2013.
- Interest-bearing net debt decreased and totalled -20.7 million euros at the end of the year.
- The Group’s equity ratio increased by 8 per cent to 62.5 per cent.
- At the end of 2014, 15,305 people were employed at Fazer.
Annual Review 2014
Fazer’s Annual Review 2014 is published on Fazer’s web page www.fazergroup.com/about-us/annual-review/
Corporate Responsibility Report
Fazer’s Corporate Responsibility Report is published on Fazer’s web page http://www.fazergroup.com/corporate-responsibility-review-2014
Jouni Grönroos, CFO and Deputy CEO, tel. +358 40 504 5125
Ulrika Romantschuk, SVP, Communications & Branding, tel. +358 40 566 4246
Requests for interviews: Johanna Savander, Communications, tel. +358 50 326 4098