Valora Annual Report

Sales negative, EBIT positive

Backwerk and Ditsch are Valora brands
Backwerk and Ditsch are Valora brands

Swiss food convenience provider Valora (including Ditsch, Backwerk) has reported mixed results for 2020, with external sales down 16.7 percent compared to 2019 due to Corona restrictions. Nevertheless, the operating result is in the black, with the company reporting a pre-tax profit (EBIT) of 14.1 million Swiss francs (CHF) for 2020. The result is thus at the upper end of its own forecast.

External sales were CHF 2,233.3 million (2019: CHF 2,680.6 million, -16.7%). In addition, sales shifted from food to tobacco, non-food and services. Out-of-home consumption declined significantly, with external sales in the food category down 27.9% (in local currency). In the pre-crisis months of January and February 2020, this category had grown by 2.5 percent.

Gross profit in fiscal 2020 was CHF 743.3 million, down from CHF 917.2 million in the previous year. This decline resulted in particular from the aforementioned lower share of high-margin food sales.

Many sales outlets closed or open for shorter periods

The regulatory Corona measures led to a decline in customer frequency during the first and second waves, particularly at high-frequency locations - by up to minus 80 percent during the lockdown months. The company had to significantly reduce opening hours and close some outlets altogether. Throughout the year, an average of about 5 percent of outlets were closed - with a peak of about 20 percent in April 2020. About 30 percent operated with reduced opening hours.

Overall, retail formats were significantly less affected than food service formats. Both retail and foodservice formats went through an initial recovery phase towards the end of Q2 and especially during Q3 2020. However, with the lockdown in the wake of the second wave of the Coronavirus, the revenue trend deteriorated again in Q4 2020. The foodservice B2B business with pretzel bakery products experienced a significant temporary drop in orders during the first lockdown. Valora cites the weakened out-of-home foodservice market as the reason for this.

Food remains growth driver

The company considers its own business model to be crisis-resistant and also promising for the future. Valora will therefore continue to pursue its strategic priorities. Food remains the most important growth driver, it said. Capital expenditure in 2020 was CHF 55 million, some 60 percent of the previous year's figure.

The B2B capacity expansion for pretzel bakery production in Germany and the USA was fully completed in Q1 2020. Thanks to the new facilities, the business unit was able to offer further product innovations and win not only new orders from existing food service customers, but also new customers such as food retailers.

The conversion of outlets secured through the SBB tender into avec convenience stores and modernised k kiosk outlets with extended food offerings progressed well, Valora reports. Only 30 conversions had to be postponed due to an interruption forced by Corona. The project is expected to be completed in 2022.

Valora sought to further enhance the appeal of its fresh food offering with innovative products and a range of vegan and vegetarian alternatives. As part of its commitment to sustainability, Valora has also worked with food rescue app Too Good To Go to save some 270,000 food portions from disposal since 2019 and launched other promising pilot projects to combat foodwaste.

Valora is driving the development of new digital convenience solutions. In this way, it has continued to build up its internal capabilities even during the crisis. The focus is on automated stores and self-checkout, loyalty, delivery, e-commerce and process improvements.

With regard to the outlook for the coming year, the company is cautious due to the uncertainty caused by the Corona pandemic. While it expects the situation to ease from March onwards, Valora does not anticipate any significant increase in customer footfall before June. So the first half of the year will continue to be severely impacted by the Corona crisis, it said. "In the second half of 2021, however, business should recover significantly and thus develop better than in the previous year," the annual report says. The food category in particular is expected to benefit, it said. The company expects to regain monthly profitability comparable to the pre-crisis period by the end of 2021.
About Valora
The Swiss company operates primarily at transport locations in Switzerland, Germany, Austria, Luxembourg, the Netherlands and France. In addition to kiosk concepts, its portfolio includes the foodservice brands Ditsch, Brezelkönig, Caffè Spettacolo and Backwerk. Valora also operates one of the world's leading production facilities for pretzel pastries and benefits from a highly integrated value chain in the bakery products sector. According to its own figures, Valora generates annual external sales of over CHF 2.7 billion. The Group is headquartered in Muttenz, Switzerland. In Germany, foodservice sales (net) in 2019 were an estimated EUR 265 million (+ 1 %) at 495 units (-19 cf. previous year) (as of Dec. 31, 2019, source: foodservice Top 100).