Bell Food Group makes operational progress in the 2019 financial year; one-off effects impact earnings
The Bell Food Group reported sales of CHF 4.1 billion (CHF -65.0 million, -1.6%) in 2019. Taking acquisitions and divestments into account, operating growth amounted to CHF 61.4 million (+1.5 %). Thanks to the focus on higher value-added products, the gross margin increased. Reported EBIT amounted to CHF 95.3 million (CHF -45.3 million, -32.2 %). Taking into account all special items of CHF 53.9 million, EBIT in 2019 amounted to CHF 149.1 million (CHF +8.5 million, +6.0 %).
All business divisions contributed to the improved operating earnings situation. This progress was achieved thanks to increased sales of products with higher added value, effective cost management, process optimization and the partial passing on of higher procurement costs. Synergies were also achieved between the business divisions.
As in the previous year, the financial result was impacted by mainly book foreign currency effects amounting to CHF -9.6 million (previous year CHF -4.6 million). The reported profit for the year amounted to CHF 49.6 million (CHF -39.7 million, -44.5 %). Adjusted for all special items, the annual profit of CHF 103.5 million (CHF +14.2 million) is 15.9 percent higher than the previous year.
All in all, the Bell Food Group has a very solid balance sheet structure. Equity amounts to CHF 1.3 billion, and the equity ratio of 47.5 percent is on a par with the previous year. Financial liabilities decreased from CHF 903.6 million in the previous year to CHF 877.5 million.
Despite the significantly lower reported net profit for 2019, the Board of Directors will propose to the Annual General Meeting that the distribution remain unchanged at CHF 5.50 per share. The Board of Directors is thus taking into account the various special factors. The distribution is to be made in equal parts as an ordinary dividend and as a distribution from the reserves from capital contributions.
The reorganization of the Bell Germany division, raw material prices and start-up costs for the new plants had a negative impact on the 2019 financial statements with special items totalling CHF 53.9 million.
The Bell Food Group sold the German plants in Suhl and Börger at the end of July 2019 in the form of a transfer of operations. This completed the exit from the German sausage business announced in June 2019. At the same time, the Bad Wünnenberg (DE) site was converted into a production plant for fresh convenience products for Hilcona. The reorganization burdened the Bell Germany division with costs of CHF 38.9 million.
Start-up costs for the new production plants opened in 2019 led to additional costs totaling CHF 6.0 million. Most of this is attributable to the commissioning of the new convenience plant in Marchtrenk, Austria, in spring 2019.Development in the segments
In a slightly declining market for meat and sausage products, the
Bell Switzerland division recorded an upward trend in earnings despite lower sales and made operational progress, particularly in the second half of the year. This was due to the focus of the product mix on higher value-added products and effective cost management. The process optimization measures introduced in the previous year also proved effective.
The reorganisation of Bell Germany and the sharp rise in raw material prices for pork in Europe had a significant impact on the business performance of the Bell International division. Adjusted for these special effects, the division recorded pleasing sales growth in 2019. With the reorganization in Germany and the commissioning of the Serrano production plant in Fuensalida (ES), the Bell Germany division is focusing on its strong position in the cured ham segment. The new production plant for Serrano ham with a capacity of around 1 million hams per year was opened in summer 2019. In future, the Bell Germany division will focus on its strong position in German and international cured ham. In the Western/Eastern Europe Division, the positive trend in France, Poland and Hungary has continued. In the Poultry Division, the measures to increase efficiency and the investments in infrastructure are having the desired effect.
In the convenience market, ultra-fresh and ready-to-eat products were particularly in demand in 2019. Thanks to innovative product concepts, the Convenience business division was able to benefit from this trend. The Eisberg, Hilcona and Hügli divisions, which are part of the business division, recorded above-average growth rates, particularly in high value-added product ranges. Innovations include, for example, the plant-based "The Green Mountain Burger", which will soon also be available in retail outlets in addition to food service.
Outlook for 2020
In the current financial year, the Bell Food Group intends to make further operational progress in all business areas. Raw material prices in Europe are expected to remain volatile. The timely realization of higher procurement costs in the sales prices therefore remains crucial for the development of earnings. Thanks to the new production capacities for raw ham and fresh convenience products, there are further growth opportunities in these attractive markets.
Change in the Board of Directors of Bell Food Group LtdThe Board of Directors of Bell Food Group Ltd has nominated Thomas Hinderer and Joos Sutter as new members of the Board of Directors. They will be proposed to the Annual General Meeting on March 17, 2020 as replacements for the current Board member and Vice Chairwoman Irene Kaufmann and Board member Andreas Land. The current members of the Board of Directors are stepping down from the Board of Directors at their own request. The Board of Directors intends to elect Joos Sutter as Vice-Chairman of the Board of Directors if he is elected by the Annual General Meeting.
Thomas Hinderer (61) has been Chairman of the Executive Board of Eckes AG, Nieder-Olm, Germany, and CEO and Chairman of the Executive Board of the Eckes Granini Group since 2005. After fifteen years in these positions, he will be leaving in July 2020 at his own request to take on new challenges. He previously held management positions at Unternehmensgruppe Theo Müller in Germany (2001 to 2005) and Bestfoods Deutschland (1992 to 2001), among others. Thomas Hinderer has a degree in business administration (FH) in addition to his vocational training as an industrial clerk. He has extensive and valuable experience in international food production and international trade.
Joos Sutter (55) has been Chairman of the Coop Cooperative, Basel, since 2011 and, as Head of the Retail Directorate, is responsible for the core business of the supermarkets. He has worked in various management positions for the Coop Group since 1996, including as Head of Trading at Coop Genossenschaft (2009 to 2011) and at Interdiscount (1999 to 2009). Joos Sutter studied economics at the University of St. Gallen and has been a certified public accountant since 1994. He has extensive expertise in the areas of purchasing, logistics, IT and sales.
With both candidates, the Bell Food Group is gaining highly committed and experienced personalities.
About Bell Food Group
The Bell Food Group is one of the leading meat and convenience processors in Europe. Its product range includes meat, poultry, charcuterie, seafood and convenience products. With the Bell, Eisberg, Hilcona and Hügli brands, the Group covers a wide range of customer needs. Its customers include the retail and food service sectors as well as the food industry. Around 12,500 employees generate annual sales of over CHF 4 billion. The Bell Food Group is listed on the Swiss stock exchange.