Bel - First-Half 2021 Financial Information - Sales and Financial
Results
BelFirst-Half 2021
Financial InformationSales and Financial
Results
Organic sales growth picks up in second
quarterOngoing transformation process and CSR
initiative continue
- First-half financial performance shows balance and
resilience
- H1 consolidated sales total €1.7bn, down 2.7% on a published
basis but up a slight 0.7% organically.
- Q2 organic sales growth advances a strong 5.5% and increases
1.2% after adjusting for the 2020 Covid impact;
- Operating income declines 38.0% to €109 million, due in
particular to an unfavorable forex impact and a sharp rise in raw
material prices.
- H1 2020 consolidated net profit – Group share comes to €67m,
versus €105m in the year earlier period.
- Relevance of strategic choices to strengthen Bel's
position as a major player in the global healthy snack market
confirmed
- High growth North American and Chinese markets report excellent
performances.
- MOM's continued positive growth trajectory sharply accelerates
development in fruit-based food segment.
- CSR efforts renewed
- Carbon analysis surveys are stepped up at partner farms around
the globe.
- First international, 100% plant-based food brand, Nurishh, is
launched.
- France Relance recognizes Bel's contribution to CSR.
|
Amounts are expressed in millions of euros and
rounded off to the nearest million. Ratios and variances are
calculated based on underlying amounts, not rounded off
amounts.
Meeting July 29, 2021 under the chairmanship of Antoine Fievet,
Bel's Board of Directors approved the consolidated financial
statements for the six-month period ended June 30, 2021.
Additionally, the statutory auditors’ report on the consolidated
financial statements for the interim period was issued without
qualification.
Antoine Fievet, Chairman and Chief Executive
Office of the Bel Group, said, "The first half of the year was
marked by significant disparities around the world. While the first
quarter was adversely impacted by an unfavorable comparison base
stemming from the Covid-19 pandemic, lost ground was clearly made
up in the second quarter, with robust organic sales growth achieved
and strong performances reported by many of our core brands,
despite persistent difficulties encountered in the Middle East and
North Africa region. MOM's excellent performance during the period
and the continued growth path sustained in the North American and
Chinese markets validated our strategic decisions and the relevance
of our transformation plan, which is aimed at building Bel's
leadership in the healthy snack market. These growth drivers will
be key to building a sustainable future for Bel and are expected to
continue supporting our performance in the second half of
2021."
Key figures
millions of euros |
First half 2021 |
First half 2020 |
% change |
Sales |
1,691 |
1,737 |
-2.7% |
Recurring operating income |
133 |
177 |
-24.7% |
Operating income |
109 |
175 |
-38.0% |
Operating margin |
6.4% |
10.1% |
-370bp |
Net financial result |
(14) |
(11) |
+28.2% |
Consolidated net profit - Group share |
67 |
105 |
-36.6% |
Tangible new progress on CSR (Corporate Social
Responsibility)
In line with its model for engaged and
responsible growth, Bel in the first half of 2021 continued its
efforts to cut carbon emissions and to make healthier food more
accessible to all, as embodied in its "For All. For Good" corporate
signature.
The company stepped up its carbon analysis
surveys at dairy farms operated by member producers of the Bel West
Producers Association (APBO — Association des Producteurs Bel de
l'Ouest) in France, to meet Bel's goal of cutting greenhouse gas
emissions by 20% in upstream dairy farming by 2030, versus 2017. By
end 2021, Bel aims to have completed the surveys at 70% of its
partner farms worldwide, compared with 60% at end 2020. With a view
to re-balancing animal and plant-based food sources to meet the
needs of a growing world population while preserving the earth's
resources, Bel launched its first international, 100% plant-based
food brand, Nurishh. The launch complements perfectly the numerous
actions taken by the company to develop in the plant-based space
and the strategic partnerships forged with startups and pioneering
companies in plant-based foods. Bel thus confirmed its goal to make
plant-based food accessible to all and intends to become one the
leading players in this segment. At the same time, as part of the
100th anniversary of its iconic The Laughing Cow® brand, Bel in
June launched a new simplified recipe that uses just four dairy
ingredients, including cheese, butter, milk and dairy mineral
concentrates. This renewed product will be distributed in most
European markets in the coming months.
Lastly, Bel received plaudits for its active
contribution to CSR by France Relance, the French government's
historic, €100-billion recovery plan to restart economic activity
and limit the economic and social fallout from the global Covid-19
pandemic. The France Relance plan earmarks some €35 billion for
industry alone. Bel won acclaim for two of its projects, including
the construction of a biomass boiler aimed at meeting 70% to 80% of
the heating needs of its plant in Evron, France, while cutting CO2
emissions at the site by some 8,500 metric tons per year, and the
deployment of a plant-based food project at the company's Research,
Innovation and Development center and its plants to develop new
generations of cheese products made from vegetal proteins.
A balanced and resilient first-half
performance
Sales
In the first half of 2021, Bel reported
consolidated sales of €1,691 million, down 2.7% on a published
basis, versus €1,737 million in the prior-year period. Unfavorable
foreign exchange fluctuations negatively impacted sales by 3.9%, or
€67.4 million, primarily due to the euro's rise against the U.S.
dollar. Sales grew 0.7% organically for the period, after adjusting
for hyperinflation in Iran1.
After an unfavorable comparison base
significantly weighed down the sales performance in Q1 2021, with
growth in the year-earlier quarter atypically boosted by
pandemic-related panic buying, sales picked up in Q2 2021, despite
weaker than expected sales during the Ramadan season. Q2 2021 sales
advanced 2.7% to €850 million, supported by particularly strong
organic sales growth of 5.5% (1.2% after adjusting for the 2020
Covid impact), underscoring consumer trust in Bel's core brands. In
particular, the growth trajectory of the Boursin® brand was
confirmed in France, the United Kingdom and North America, where
its spreadable version outperformed the market average. After a
tough year marked by the Covid-19 pandemic, which penalized snack
food brands, Mini Babybel® resumed growth notably in North America,
and benefited from its successful "Join the Goodness" campaign and
beefed-up promotional activity. Lastly, The Laughing Cow® once
again reported very strong growth in the United States and
Canada.
The sales breakdown by market segment is as
follows.
|
Second quarter |
First half |
millions of euros |
2021 |
2020 |
% change |
% organic growth** |
2021 |
2020 |
% change |
% organic growth** |
Global Markets |
687 |
688 |
-0.1% |
+2.4% |
1,377 |
1,434 |
-4.0% |
-0.8% |
New
Territories* |
164 |
141 |
+16.4% |
+21.1% |
314 |
303 |
+3.7% |
+8.2% |
Total |
851 |
828 |
+2.7% |
+5.5% |
1,691 |
1,737 |
-2.7% |
+0.7% |
* New Territories encompass the business
activities of MOM (Mont-Blanc, Materne), as well as markets in
Sub-Saharan Africa and China. ** Including adjustments for the
hyperinflation environment in Iran and excluding AIF (All in
Foods).
Global Markets
Sales remained buoyant in most European
countries. In Germany, momentum was particularly strong as result
of a favorable comparison base and the performance of Mini
Babybel®, whose popularity among consumers was supported by
promotions and in-store promotional campaigns. In France, steady
sales growth was reported by all traditional brands until mid-May,
when the ending of pandemic lockdown measures sparked a switch in
consumer buying behavior toward non-food purchases. Volume
performances in the countries of the Middle East and North Africa
region were more contrasted, as economic conditions eroded and
lower than expected sales were reported during the usually robust
Ramadan season. Algeria in particular suffered from significantly
weakened economic conditions since the second half of 2020, leading
to highly inflated prices for basic food products and adversely
impacting consumer purchasing power. Countries in the Levant also
reported deteriorated economic conditions and major local currency
devaluations in Lebanon and Iraq. Particularly in Lebanon the sharp
decline of the Lebanese pound triggered high inflation which
significantly impacted consumer offtake.
In North America, the underlying trend remained
very positive. Core brands Mini Babybel®, The Laughing Cow® and
Boursin® all reported excellent performances, while promotional
efforts were sustained and advertising outlay was increased,
confirming the relevance of Bel's strategy and its aims to
accelerate growth in this geographical area.
New Territories
New Territories2 continued along a path of solid
growth, once again driven by MOM's sales performance. Particularly
strong momentum was reported in France and the United States as a
result of beefed up promotional activity in all retail channels.
China also reported sharply stepped-up growth.
Sales by geographic region
|
Second quarter |
First half |
millions of euros |
2021 |
2020 |
% change |
% organic growth* |
2021 |
2020 |
% change |
% organic growth* |
Europe |
480 |
443 |
+8.5% |
+8.2% |
942 |
916 |
+2.8% |
+2.9% |
Middle East & Greater Africa |
135 |
168 |
-19.8% |
-15.4% |
298 |
367 |
-18.7% |
-12.2% |
Americas, Asia Pacific |
235 |
217 |
+8.4% |
+16.4% |
451 |
454 |
-0.7% |
+6.9% |
Total |
850 |
828 |
+2.7% |
+5.5% |
1,691 |
1,737 |
-2.7% |
+0.7% |
* Including adjustments for the hyperinflation
environment in Iran and excluding AIF (All in Foods).
Results
In the first half of 2021, consolidated
operating income totaled €109 million, down 38.0% over the first
half of 2020.
Operating income by segment is as follows.
millions of euros |
6 months 2021 |
6 months 2020 |
% change |
Global Markets |
64 |
122 |
-47.5% |
New
Territories* |
45 |
53 |
-15.8% |
Total |
109 |
175 |
-38.0% |
* New Territories encompass the business
activities of MOM (Mont-Blanc, Materne), as well as markets in
Sub-Saharan Africa and China.
Operating margin fell 370 basis points during
the period. The decline stemmed primarily from the published
decrease in sales, higher raw material prices, high volatility of
foreign currencies, and increased promotional spending in some
markets. Productivity efforts implemented by Bel and savings on
administrative and general overhead expenses nevertheless helped to
limit the adverse impacts of those factors. The decline also
includes expenses arising from the project to dispose of the Royal
Bel Leerdammer NL, Bel Italia and Bel Deutschland subsidiaries, the
Leerdammer brand and all related rights, as well as the Bel Shostka
Ukraine company.
After taking into account net financial result
and income tax expense, consolidated net profit, Group share,
totaled €67million, compared with €105 million at June 30,
2020.
Financial position
Bel's balance sheet remained healthy and strong
at June 30, 2021, with net financial debt amounting to €719.0
million (including €101.3 million in right-of-use liabilities under
IFRS 16), versus €584.1 million (including €111.1 million in
right-of-use liabilities) at December 31, 2020. The increase
resulted chiefly from the acquisition of an additional 17.56%
interest in MOM in April 2021 for €152 million, in accordance with
the call option granted by MOM's minority shareholders in 2016.
Following this transaction, Bel holds 82,5% of the ordinary shares
of the MOM Group. At June 30, 2021, the Group's equity stood at
€1,844.8 million, compared with €1,858.7 million at December 31,
2020.
Bel continues to enjoy strong liquidity both in
terms of cash and untapped credit lines. At June 30, 2021, Bel had
€441 million in surplus cash and cash equivalents and €820 million
in untapped credit lines maturing in 2023 and 2024.
As a reminder, to optimize its financial
structure and take advantage of favorable financing conditions, Bel
successfully issued a $150-million US Private Placement (USPP) bond
under French law to institutional investors in June 2020. The
15-year bond matures in November 2035.
Outlook for 2021
In the second half of 2021, Bel expects to see a
tough economic and financial environment, marked once again by
currency volatility, unfavorable raw material prices and an
unstable economic and geopolitical context in the Middle East and
North Africa region. Further, because the evolving Covid-19
pandemic carries a number of uncertainties and clouds visibility
for the months ahead, Bel reiterates its cautious stance going
forward.
Against this backdrop, Bel nevertheless expects
to benefit from the ongoing, underlying positive trend observed in
key territories like the United States, Canada and China, as well
as from MOM's very positive momentum. These growth drivers, which
are expected to underpin the company's performance in the coming
months, are perfectly in tune with the strategic choices made in
recent years to strengthen Bel's leadership in the healthy snack
market, while developing its product offering in the three
complementary markets of dairy, fruit and plant-based foods. At the
same time, Bel is renewing its commitment to help fight against
climate change and to contribute to a new and positive food
industry business model. In particular, the company reiterates its
aim to achieve its carbon-cutting goals under Scope 1 and Scope 2
by the end of the year3.
After entering into a unilateral sales agreement
on March 18, 2021, and obtaining a unanimously favorable opinion
from labor representation bodies, Bel on July 13, 2021 signed an
agreement to sell the Royal Bel Leerdammer NL, Bel Italia and Bel
Deutschland subsidiaries, the Leerdammer brand and the Bel Shostka
Ukraine company to Lactalis, in exchange for Lactalis' 23.16%
interest in Bel (1,591,472 Bel shares). The transaction is in line
with Bel's strategy to expand the company's activities beyond
cheese products and strengthen its position as a major player in
the healthy snack market. The transaction, which is subject to
approval by the European Commission under merger control
regulations, is expected to be completed by the end of Q3
2021.
Bel's financial performance indicators and
additional annotations
The Group uses non-IFRS financial performance
indicators internally and for its external communication. These
non-IFRS indicators are defined below:
Organic growth corresponds to reported sales
growth, excluding impacts from foreign exchange fluctuations and
changes in the scope of consolidation, i.e. on a constant structure
and exchange rate basis and excluding inflation in Iran. Since
2020, Iran's economy is deemed to be a hyperinflation economy.
Accordingly, inflation impacts, based on the Consumer Price Index
(CPI), were excluded when determining organic growth. The organic
growth rate is calculated by applying the exchange rate for the
prior year period to the current year period.
Operating margin corresponds to operating
income.
Net financial debt is described in note 5.4 to
the summary consolidated financial statements. It consists of long-
and short-term borrowings, long- and short-term right-of-use
liabilities, and current used banking facilities, less cash and
cash equivalents.
Given the process under way to dispose of the
Royal Bel Leerdammer NL, Bel Italia and Bel Deutschland
subsidiaries, the Leerdammer brand and all related rights, and the
Bel Shostka Ukraine company, and given the probable assumption that
the transaction will be completed within the next 12 months, Bel
has applied IFRS 5 - Non-current Assets Held for Sale and
Discontinued Operations, leading to the presentation of a separate
line on both the asset side and liability side of the consolidated
balance sheet. The income statement has not been restated. After
excluding these assets, organic growth comes to 0.1% in the first
half of 2021.
This press release may contain forward-looking
statements. Such trend and/or target information should in no way
be regarded as earnings forecast data or performance indicators of
any kind. This information is by nature subject to risks and
uncertainties that may be beyond the Company's control. A detailed
description of these risks and uncertainties is provided in the
Company's Universal Registration Document, available at
(www.groupe-bel.com). More comprehensive information about the Bel
Group can be found in the "Regulatory Information" section of the
www.groupe-bel.com website.
About Bel
The Bel Group is a world leader in branded
cheese and a major player in the healthy snack market. Its
portfolio of differentiated and internationally recognized brands
include such products as The Laughing Cow®, Kiri®, Mini Babybel®,
Leerdammer®, Boursin®, Nurishh®, Pom’Potes®, and GoGo squeeZ®, as
well as some 20 local brands. Together, these brands helped the
Group generate sales of €3.46 billion in 2020. Some 12,510
employees in some 30 subsidiaries around the world contribute to
the deployment of the Group's mission to champion healthier and
responsible food all. Bel products are prepared at 33 production
sites and distributed in nearly 120 countries.
www.groupe-bel.com------------------Public
relations
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6.17.49.97.76
1 Organic growth corresponds to reported sales
growth, excluding impacts from foreign exchange fluctuations and
changes in the scope of consolidation, i.e. on a constant structure
and exchange rate basis, and excluding inflation in Iran. Since
2020, Iran's economy is deemed to be a hyperinflation economy.
Accordingly, inflation impacts, based on the Consumer Price Index
(CPI), were excluded when determining organic growth.
2 New Territories encompass the business
activities of MOM (Mont-Blanc, Materne), as well as markets in
Sub-Saharan Africa and China.
3 Scope 1 covers direct factors of greenhouse gas emissions
generated by an organization or a territory. Scope 2 covers
indirect factors of greenhouse gas emissions associated with
electricity and heat usage.
- Bel_2021_Information financière semestrielle_US