Positive trend continued in Food Solutions – Grain Trade volumes declined as predicted due to weak harvest season
Since 1 January 2018 Apetit has started reporting its first (Q1) and third (Q3) quarter results as Business Reviews. The Half-year Financial Report (Q2) and Financial Statements Release (Q4) will provide more extensive reporting and contain segment information.
JANUARY–MARCH 2018 IN BRIEF
- Consolidated net sales amounted to EUR 59.7 (74.0) million.
- Operational EBITDA was EUR 0.0 (0.4) million.
- Operational EBIT was EUR -1.4 (-1.0) million.
- Profit for the period came to EUR -1.7 (-1.4) million, and earnings per share amounted to EUR
-0.27 (-0.23).
The information has not been audited. The figures in parentheses are the equivalent figures for continuing operations for the same period in 2017, and the comparison period means the corresponding period in the previous year, unless otherwise stated.
Juha Vanhainen, CEO:
“The key focus areas of the strategy that was updated at the beginning of March – renewal, internationalisation and efficiency improvement – have defined activities in all the Group’s business operations during the first months of the year.
We continued to be a leader in the area of vegetable-based diets by introducing to the market several new products in different product groups. We also expanded into a new product group area, which was ready-to-eat, portable snack products, by launching vegetable snacks and bowl dishes. Demand for various snacks has grown and will continue to grow significantly, as more and more people are replacing meals with snacks when they are on the move. As part of its nutrition commitments, Apetit wants to offer healthy alternatives in this product group and make it easier for people in different age groups to increase the amount of vegetables in their diet.
Internationalisation progressed in line with targets, as the share of international trade in the food trade in January-March 2018 had already equalled that of the full year in 2016. Apetit has traditionally been an important operator in the international grain trade, but the company now also wants to significantly increase the share of international trade in the food trade. Apetit’s food products that attract the most international interest are added-value products, such as vegetable patties and balls, as well as peas.
The Group’s net sales declined as predicted from the comparison period as a result of the weak harvest season in 2017. The weak harvest season had the greatest impact on the grain trade where sales volumes have declined temporarily also weakening the first-quarter profit. Positive profit performance continued in Food Solutions where sales of frozen and fresh foods grew strongly. In Oilseed Products, production grew slightly on the comparison period in line with the target set in the strategy.
We continue our measures to improve profitability. As a result of the sale of the Seafood business we are focusing on simplifying our operations and boosting their efficiency throughout the Group. Our clear target is to ensure profitable growth.”
KEY FIGURES
|
EUR million |
1-3 |
1-3 |
Change |
2017 |
|
CONTINUING OPERATIONS, KEY FIGURES |
|
|
|
|
|
Net sales |
59.7 |
74.0 |
-19% |
311.8 |
|
Operational EBITDA |
0.0 |
0.4 |
|
6.8 |
|
Operational EBIT |
-1.4 |
-1.0 |
|
1.3 |
|
Operating profit |
-1.4 |
-1.0 |
|
1.1 |
|
Share of profit of associated company Sucros |
-0.5 |
-0.6 |
|
1.0 |
|
Profit for the period |
-1.7 |
-1.4 |
|
2.9 |
|
Earnings per share, EUR |
-0.27 |
-0.23 |
|
0.46 |
|
Working capital, at end of period |
30.2 |
42.2 |
|
30.0 |
|
GROUP, KEY FIGURES incl. discontinued operations during comparison period, Seafood |
||||
|
Equity per share, EUR |
17.19 |
18.08 |
|
18.10 |
|
Return on capital employed (ROCE), % |
2.5% |
1.3% |
|
2.4% |
|
Net cash flow from operating activities |
-4.5 |
-0.5 |
|
20.0 |
|
Equity ratio, % |
73.6% |
62.2% |
|
72.6% |
|
Gearing, % |
-5.4% |
14.9% |
|
-9.6% |
|
Investment |
0.7 |
1.4 |
|
5.2 |
FINANCIAL PERFORMANCE IN REVIEW PERIOD
Consolidated comparable net sales declined 19 per cent to EUR 59.7 (74.0) million. The decline in net sales resulted in full from the temporary decline in Grain Trade volumes. In contrast, in Food Solutions net sales grew considerably in both frozen foods and fresh products in all sales channels. In Oilseed Products, net sales fell slightly short of the comparison period as deliveries focused on expellers during the first quarter.
Consolidated operational EBIT was EUR -1.4 (-1.0) million. In the Grain Trade, profitability was weakened by reduced volumes due to a weak harvest season. In Food Solutions, profit improved as a result of record sales in the frozen foods group. In Oilseed Products, profitability fell slightly short of the comparison period as the weak harvest season reduced the availability of Finnish raw materials.
The Group’s liquidity was good, and its financial position is strong. The equity ratio was 73.6 (62.2) per cent, and gearing was -5.4 (14.9) per cent. Consolidated cash flow from operating activities after interest and taxes amounted to EUR -4.5 (-0.5) million in January-March mainly due to the increase in grain stocks.
SEASONALITY OF OPERATIONS
In accordance with the IAS 2 standard, the historical cost of inventories includes a systematically allocated portion of the fixed production overheads. With production focusing on harvest time, raw materials are mainly processed into finished products during the final quarter of the year. This means that more fixed production overheads are recognised on the balance sheet in the fourth quarter than during the other quarters of the year. Due to this accounting practice, most of the Group’s annual profit is accrued in the final quarter. The seasonal nature of profit accumulation is most marked in the frozen foods group of the Food Solutions segment and in the associated company Sucros, where production reflects the crop harvesting season.
IFRS 15 REVENUE RECOGNITION – ADOPTION OF STANDARD
Apetit is applying the IFRS 15 Revenue Recognition standard as of 1 January 2018. Adjustments based partly on volume will be recognised as an adjustment to net sales. These items were previously recognised in expenses. The change will not have an impact on the operating profit. As a result of the change, net sales will decline by about EUR 2 million per year. The updated net sales for Q1 2017 is EUR 74.0 (previously 74.6) million and the updated net sales for the full year 2017 is EUR 311.8 (314.0) million.
PROFIT GUIDANCE FOR 2018 UNCHANGED
The Group’s full-year operational EBIT from continuing operations is expected to improve year-on-year (EUR 1.3 million in 2017). Due to the seasonal nature of the Group’s operations, most of the annual profit is accrued in the second half of the year. Sales volumes and the profit outlook for early 2018 are burdened by the weak harvest of 2017.
Apetit Plc
For further information, please contact:
Juha Vanhainen, CEO, tel. +358 10 402 00
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 2017, the company’s net sales were EUR 312 million and it had approximately 640 employees. Read more at apetitgroup.fi.
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CEO's review H1/2025
“Apetit Group’s operating result for the first half of the year declined year-on-year due to a weaker result in Oilseed Products. The prolonged collective bargaining negotiations between the Finnish Food and Drink Industries' Federation and the Finnish Food Workers’ Union caused challenges to both of Apetit's businesses during the first two quarters of the year. The overtime and shift change bans during the negotiations affected delivery reliability in both businesses. The strike days related to the negotiations also affected operations in Food Solutions. Food Solutions improved its result in the first half of the year. Both sales volumes and net sales have increased slightly year-on-year. In Oilseed Products, the decline in result was attributable not only to the price of the raw material used, but also to the decrease in sales of refined oil and challenges in delivery reliability. Apetit’s operating result in the second quarter declined from the comparison period. The delivery reliability situation normalised in both businesses in June. Net sales increased in both businesses in the second quarter year-on-year. In Food Solutions, also sales volumes increased. Retail sales developed positively due to the cool early summer being favourable to the sale of frozen products. In July, we announced an investment of approximately EUR 2 million in the Kantvik vegetable oil milling plant. The strategic investment improves the production process of the raw material for the BlackGrain from Yellow Fields® rapeseed powder. The investment in late 2025 will strongly support the commercialisation of BlackGrain. The investment will multiply BlackGrain’s raw material production capacity and significantly improve the quality and efficiency of the process. The total investment includes replacement investments in the milling plant’s current processes. The availability of raw materials has been one of the bottlenecks for increasing actual production. We will continue the practical development of BlackGrain’s various product applications. Thanks to its versatility, BlackGrain is suitable for a wide range of products in the food industry. Customer-oriented product application work is carried out for both BlackGrain rapeseed powder and TVP plant protein made from BlackGrain, which contains pea protein in addition to BlackGrain. At the same time, we are investigating alternatives for producing the BlackGrain rapeseed powder. Apetit is assessing potential partnerships and starting production by making an investment in the Kantvik vegetable oil milling plant or with purchased services. The strategically important ERP project has progressed according to schedule. The new ERP system is scheduled to be implemented in Oilseed Products by the end of the year, after which all Group operations will be covered by the new system. The outlook for the harvest season is currently moderate. In early summer, even the cool weather offered a promising start to the growing season, which benefitted spinach and pea in particular. However, the hottest period in the history of measurements in July weakened the harvest for frozen peas due to the rapid ripening of the harvest. Regional heavy rains taxed frozen pea crops in some places. Frozen peas are harvested on a record-large area of 2,000 hectares. The success of the harvest season is ultimately determined by the weather in the autumn and the harvesting conditions. The growing season of onion, which is Apetit’s contract farming crop for the first time, has largely gone according to expectations. Onion is a significant crop in Apetit’s product range and a strategic addition to the list of contract farming crops. The cultivation areas for Finnish oilseed plants grew strongly from the previous year. The growth season of spring-sown oilseed plants has largely progressed according to expectations and the harvest outlook is at an average level. There are regional differences in weather conditions and pest situation. The weather conditions early in the growing season were favourable for autumn oilseed plants, so oilseed plant fields shone exceptionally yellow in the early summer. The harvest outlook for autumn oilseed plants is good. We will continue to invest in Finnish cultivation development. Several variety trials are underway in the RypsiRapsi forum. Trials are underway in autumn oilseed plants with regard to sowing technology, among other things, and fertiliser and sowing method trials are underway in spring oilseed plants, both on a square and farm scale. The Räpi experimental farm, on the other hand, is running two projects related to different new plant protection methods. 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CEO's Review Q1/2025
"Apetit Group’s operating result for the first quarter declined from the comparison period. The result of Food Solutions improved, but the operating result of Oilseed Products decreased from the strong result of the comparison period. In Food Solutions, both net sales and sales volumes were on a par with the comparison period. Retail sales increased slightly year-on-year. The result of Food Solutions was boosted by the harvest season production that continued until 2025 and was record-long. The weak performance of Oilseed Products was particularly attributable to anticipated expensive raw material items timed during the reporting period. The prolonged collective bargaining negotiations between the Finnish Food and Drink Industries' Federation and the Finnish Food Workers’ Union had a negative impact on Apetit’s operations during the first quarter. The ban on overtime and shift changes weakened Apetit’s delivery reliability in both businesses. The volatile global political and economic situation causes uncertainty for Apetit’s operations and reduces predictability. The effects may be reflected in the market prices of oilseed plants in particular. No short-term impact is expected due to frontloaded raw material purchases. Work on strategically important projects has continued as planned. The ERP system upgrade is progressing according to schedule. The new ERP system for Oilseed Products is scheduled to be deployed towards the end of the year. Work with rapeseed powder BlackGrain From Yellow Fields and Finnish pea protein also continues. In the autumn, we will launch a product based on textured plant protein (TVP) processed from BlackGrain in the Food service channel. The patty with BlackGrain TVP and pea protein has an excellent taste and texture – and it is a great example of the synergies between Apetit’s two businesses. The sowing season for field vegetables is expected to begin earlier than usual as fields are quickly becoming ready for sowing. During the coming harvest season, we will further increase the area used for contract farming of frozen peas. Harvesting and the from field to freezer chain ran smoothly in last year's record-large area. As a new crop, we will contract grow Finnish onions for the first time. There has been commendable willingness to grow onions. Onion is an important crop in our products: both Finnish onion cubes and the potato-onion mix are important products in the frozen vegetable and frozen potato product categories. The domestic spring rapeseed cultivation area is expected to increase by 37 per cent in the Finnish Cereal Committee VYR’s* planting intention survey. The milder and less snowy winter than usual was favourable for autumn oilseed crops in large parts of the country. There may be regional differences in the success of the wintering of autumn rapeseed, but little winter damage has been reported and autumn rapeseed in particular looks good. We will continue to invest in promoting Finnish agricultural research in both of our businesses. Diverse experimental activities of the RypsiRapsi forum and the VARPS project aimed at increasing the cultivation reliability and volume of rapeseed continued. Variety tests of autumn and spring oilseed plants will be further established in different parts of Finland, and cultivation method experiments will be continued, for example, with plant protection alternatives and new establishment methods. Among other things, the Räpi experimental farm is participating in a project to investigate the use of side streams from the food industry as soil improvement products or recycled fertilisers. Early this year, we launched new products that fit perfectly with the food trends. A new flavour was made available for the Crispy Chick patty, which has become a favourite in Apetit’s Kasvisjauhis vegan mince product range. The sales of Apetit’s plant-based patties and balls as well as the Kasvisjauhis Crispy Chick patty have developed steadily. Crispy Chick in particular has established a solid position in shop freezers: the sales of the Crispy Chick patty have been increasing for five years and more than doubled over that time. Other new products early in the year included a new flavour in the Uuni- ja grillikasvikset frozen vegetable mix and Finnish potato slices to complement Apetit’s product range of frozen potatoes. Apetit celebrated its 75th anniversary in March. Operations began as Länsi-Suomen Sokeritehdas in 1950. Today, Apetit is at the heart of food trends and nutrition recommendations: its range of plant based frozen vegetables and foods and vegetable oils is aligned with prevailing food trends, responsible eating and nutrition recommendations.” Esa Mäki, CEO
CEO’s review Q4/2024
Esa Mäki, CEO: “The full-year operating result from Apetit’s continuing operations improved from the comparison year. Food Solutions achieved a clear improvement in profit performance and Oilseed Products was slightly behind the comparison year’s result. The profit improvement in Food Solutions reflects the systematic work to improve profitability. Product portfolio management and product group-specific sales development have contributed to this profit improvement. The success of from field to freezer chain and harvest season production strengthened the result of Food Solutions. One factor behind the decline of the operating result in Oilseed Products was the decrease of market prices. The Group’s full-year net sales decreased clearly from the comparison year due to the decline in oilseed product market prices. In Food Solutions, net sales grew slightly from the comparison period. In both businesses, sales volumes declined mainly due to normal yearly fluctuations. 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The bottling line investment was realised as budgeted, amounting to approximately EUR 4.5 million. Thanks to the new bottling line, we have been able to reduce the amount of plastic we use in vegetable oil bottles by 41 per cent on average. One of Apetit’s strategic focus areas is More domestic plant proteins. We have taken steps in the commercialisation of our BlackGrain rapeseed powder. Development work has focused on improving the production process. We have started analysing different options for the production of BlackGrain plant protein. The analysis assesses potential partnerships and the organisation of production either through making an investment in the Kantvik vegetable oil milling plant or with purchased services. The analysis is expected to be completed in late 2025. The Finnish pea protein project is continuing as planned. In 2024, we conducted small-scale testing with Finnish raw materials to produce pea protein. Work carried out in the project has focused on trial runs and technology comparison to consolidate the competitive advantage. Increasing food exports and strengthening our position in Sweden is also one of our strategic focus areas. In order to achieve this goal, we established our own sales organisation in Sweden at the beginning of 2024. The strengthening of Apetit’s position in Sweden progressed. Besides retail, we have now expanded to Food service sector. We are pleased with the Finnish harvest season for both businesses. The frozen pea harvest from a record-large contract farming area was largely in line with expectations and the field-to-factory process ran smoothly. The root vegetable growing season was long, thanks to the warm autumn, and the quality and quantity of the harvest were mainly in line with the targets. According to the Natural Resources Institute Finland’s harvest forecasts, the total Finnish rapeseed harvest increased by more than a fifth. With regard to oilseed plants, things are developing in the right direction and we at Apetit are working to increase the cultivation of domestic oilseed plants. In both of our businesses, we want to use as much domestic raw materials as possible. Increasing the cultivation area of frozen peas and domestic oilseed plants is one of our strategic focus areas. The price increase of food stopped in 2024, but the higher price level is still reflected in consumer purchasing behavior. The new national nutritional recommendations published in the autumn recommend a varied diet with plenty of vegetables and adequate use of vegetable oils. Apetit focuses on domestic and plant-based raw materials as well as products that promote well-being and sustainable consumption. The cornerstones of Apetit’s product selection are relatively affordable and in many respects meet the requirements of consumers today: they are a responsible choice that supports people’s well-being and suit their budget in daily life. We expect demand to remain high in Apetit’s various product categories. At the beginning of the strategy period 2023–2025, we set the following financial objectives: operating result (EBIT) of more than EUR 9 million and return on capital employed (ROCE) of more than 8 per cent. By the end of 2024, we achieved the financial objectives set for the period. We will continue to develop Apetit in line with our vision: Growing and profitable market leader in plant-based products. I would like to take this opportunity to warmly thank all Apetit employees for the year 2024 and the owners, customers, contract growers and other partners for their cooperation.”
