Apetit Plc’s Half-Year Report 1 January – 30 June 2019: The Group’s result decreased due to the effects of the unusual grain crop of 2018 – Food Solutions’ result continued to develop favourably

Apetit Plc, Half-Year Financial Report, 16 August 2019 at 8:30 a.m.

April–June 2019, continuing operations 

  • Net sales from continuing operations were EUR 64.5 (66.7) million
  • Operational EBITDA was EUR -1.2 (1.1) million
  • Operational EBIT was EUR -2.5 (0.1) million  

January–June 2019, continuing operations 

  • Net sales from continuing operations were EUR 135.5 (120.5) million
  • Operational EBITDA was EUR 0.9 (2.0) million
  • Operational EBIT was EUR -1.7 (0.0) million  

April–June 2019, the Group, including discontinued operations* 

  • Consolidated net sales amounted to EUR 69.6 (72.8) million
  • Operational EBITDA was EUR -1.3 (0.9) million
  • Operational EBIT was EUR -3.0 (-0.6) million 

January–June 2019, the Group, including discontinued operations* 

  • Consolidated net sales amounted to EUR 146.0 (132.5) million
  • Operational EBITDA was EUR 0.5 (1.5) million
  • Operational EBIT was EUR -2.7 (-1.4) million  

* Discontinued operations: On 10 July 2019, Apetit Plc signed an agreement on selling its fresh cut products business to the Swedish company Greenfood AB. The business operations to be transferred are reported as discontinued operations in this half-year report. The transaction is expected to be completed in the second half of 2019. 

Key events during the period

  • The CEO of Apetit will change, with Juha Vanhainen resigning on 31 August 2019. Esa Mäki will become the new CEO as of 1 September 2019. 

The information in this report is unaudited. The figures in parentheses are the equivalent figures for the corresponding period in 2018, and “comparison period” refers to the corresponding period in the previous year, unless stated otherwise.

PROFIT GUIDANCE FOR 2019 UNCHANGED

The Group’s full-year operational EBIT is expected to improve year-on-year (EUR -1.0 million in 2018). The profit outlook for early 2019 was burdened by the weak grain crop of 2018. Opportunities to export Finnish grain were limited, and an imbalance of supply and demand posed challenges in the grain trade in the Baltic countries. 

Juha Vanhainen, CEO: 

“As expected, the effects of the 2018 harvest season extended into the second quarter of 2019. Due to the record low grain crop, there was not much Finnish grain to export. In the Baltic countries, we met with an imbalance of demand and supply. In addition, due to the good crop outlook for 2019, grain prices decreased considerably during the spring, which significantly reduced margin opportunities related to old harvest stocks purchased at high prices. For this reason, Grain Trade’s result was far below target. 

On the positive side, the conditions are now favourable for a good grain crop in Finland and our other main areas of supply, while the harvest of field vegetables is expected to be average. 

Due to the weak crop, our Oilseed Products business was burdened by the limited availability of rapeseed in Finland and its neighbouring regions, which caused raw material costs to increase significantly. Expectations concerning the current harvest season have been overshadowed by a considerable decrease in rapeseed cultivation areas in Finland, as well as exceptionally high numbers of pests.  

Food Solutions’ result continued to develop favourably: the sales of frozen products remained at the comparison period’s level, and the adjustment measures that were implemented improved profitability. During the spring, we completed the divestment of our service point network according to plan. An increase in labour efficiency, as well as other adjustment measures, improved the profitability of fresh cut products.  

In July, we announced that we would sell our fresh cut products business operations to the Swedish company Greenfood AB, an international operator with the capacity to further develop these operations on a larger scale. The business transfer will further strengthen Apetit’s focus on Finnish primary production. If implemented, the transaction will also improve Apetit’s profitability. 

I will resign as the CEO of Apetit on 31 August 2019. My period of nearly five years as the CEO has been challenging in many ways, but also very interesting and highly motivating. Under my supervision, we have streamlined and simplified Apetit’s business operations, as well as strengthening the company’s focus on vegetables in line with its strategy.  

In 2017, we divested our loss-making seafood business. This year, we divested our service business operations. We have also systematically improved the efficiency and profitability of our fresh cut products business. The new owner will continue this work later this year.  

We have implemented efficiency measures within the company, but we have also focused on growth and have made significant investments. Our investment of nearly EUR 10 million in the new patty and ball production line in Säkylä and our investment in a bioenergy plant in conjunction with our oil milling plant in Kirkkonummi are also strong investments in the future. We succeeded in putting our decreasing net sales from our frozen foods business back on the growth track by considerably increasing our investment in product development and international food sales.  

In addition to accelerating product development, we have systematically carried out research to develop a rapeseed protein ingredient and increase Finland’s self-sufficiency in vegetable-based proteins. We submitted an application for a novel food marketing authorisation in December 2018, and the composition and manufacturing method of the rapeseed protein ingredient have been patented in Finland since the beginning of August. 

This a solid foundation for the further development of the company.” 

KEY FIGURES  

EUR million  4–6
2019 
4–6
2018 
Change  1–6
2019 
1–6
2018 
Change  2018 
Continuing operations  
Net sales  64.5  66.7  -3%  135.5  120.5  +13%  259.9 
Operational EBITDA  -1.2  1.1  0.9  2.0  5.6 
Operational EBIT  -2.5  0.1  -1.7  0.0  1.6 
Operating profit  -3.9  -2.0  -3.9  -2.7  0.5 
Share of profit of associated company Sucros  0.1  -0.4  -0.3  -0.9  -0.7 
Profit for the period  -3.3  -2.2  -3.9  -3.3  -0.4 
Earnings per share, EUR  -0.54  -0.36  -0.63  -0.53  -0.07 
Working capital, end of period  27.2  28.4  57.2 
Investment  7.3  1.6  6.1 
Group
(incl. operations discontinued during the comparison period, Fresh Cut Products, Seafood) 
Net sales  69.6  72.8  146.0  132.5  283.1 
Operational EBITDA  -1.3  0.9  0.5  1.5  4.8 
Operational EBIT  -3.0  -0.6  -2.7  -1.4  -1.0 
Operating profit  -4.4  -2.7  -4.9  -4.1  -6.9 
Profit for the period  -3.7  -2.8  -4.8  -4.5  -7.5 
Earnings per share, EUR  -0.60  -0.45  -0.77  -0.72  -1.21 
Equity per share, EUR  15.25  16.75  16.29 
Return on capital employed (ROCE), %  -2.3%  0.6%  -1.7% 
Net cash flow from operating activities  29.8  -0.1  -23.5 
Equity ratio  71.6%  76.1%  61.4% 
Gearing  8.9%  -4.7%   21.5% 

Apetit is applying the IFRS 16 Leases standard as of 1 January 2019. A simplified procedure has been applied to the transition and the figures for the year preceding implementation have not been adjusted. This affects especially the comparability of operational EBITDA, the equity ration and gearing. The effects are described in more detail in the notes to this Half-Year Financial Report.

NEWS CONFERENCE AND WEBCAST

A news conference (in Finnish) will be held today at 10:00 a.m. at Apetit’s office, Sörnäistenkatu 1 A, Helsinki. A live webcast of the news conference can be followed via apetit.fi/for-investors. The presentation material and a recording of the webcast will be available after the news conference on the company’s website.

Apetit Plc

For further information, please contact:

Juha Vanhainen, CEO, Apetit Plc, tel. +358 10 402 2100

Apetit is number one in vegetables. It is a food industry company firmly rooted in Finnish primary production. We create well-being with vegetables by offering healthy and tasty food solutions that make daily life easier. We also produce high-quality vegetable oils and rapeseed expellers for feeding stuff, and trade grain on the international markets. Apetit seeks to lead the way in vegetable-based food solutions. Apetit Plc's shares are listed on Nasdaq Helsinki. In 2018, the company's net sales were EUR 283 million. Read more at apetit.fi.