Earnings Release • Feb 11, 2019
Earnings Release
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| Income statement $(1)$ (in thousands of EUR) | 2018 | 2017 | Evolution % | ||
|---|---|---|---|---|---|
| Turnover | 556,435 | 524,055 | $+$ | 6.2 | |
| Recurrent operating result (REBIT) (2) | 95,030 | 89,349 | $\ddot{\phantom{1}}$ | 6.4 | |
| Recurrent operating cash flow (REBITDA) (3) | 110,346 | 104,333 | $+$ | 5.8 | |
| Non-recurrent operating result | (3,005) | (91) | |||
| Operating result (EBIT) (4) | 92,025 | 89,258 | $+$ | 3.1 | |
| Financial result | (3, 324) | (2, 228) | $+$ | 49.2 | |
| Profit for the year before taxes | 88,701 | 87,030 | $+$ | 1.9 | |
| Taxes | (20, 829) | (22, 397) | $\overline{\phantom{0}}$ | 7.0 | |
| Net result | 67,872 | 64,633 | $+$ | 5.0 | |
| Non-controlling interests | 964 | 1,094 | $\overline{\phantom{a}}$ | 12.2 | |
| Equity holders of Lotus Bakeries | 66,908 | 63,539 | $+$ | 5.3 | |
| Total number of shares on 31 December (5) | 805,993 | 799,262 | $\ddot{}$ | 0.8 | |
| Key figures per share (in EUR) | |||||
| Recurrent operating result (REBIT) | 117.90 | 111.79 | $+$ | 5.5 | |
| Recurrent operating cash flow (REBITDA) (3) | 136.90 | 130.54 | $+$ | 4.9 | |
| Net result: Group share | 83.01 | 79.50 | $+$ | 4.4 | |
| Balance sheet (in thousands of EUR) | |||||
| Balance sheet total | 711,572 | 597,494 | $+$ | 19.1 | |
| Equity | 346,927 | 293,213 | $^{+}$ | 18.3 | |
| Investments (6) | 62,703 | 28,239 | $^{+}$ | 122.0 | |
| Net financial debts (7) | 96,152 | 57,202 | $+$ | 68.1 | |
| Gross dividend (8) (in EUR per share) | 29.00 | 19.00 | $\ddot{}$ | 48.7 |
In 2018, Lotus Bakeries Group's consolidated turnover increased by EUR 32.4 million to EUR 556.4 million, representing 6.2% growth. The Group achieved growth of 7% at constant exchange rates. This increase is due to organic growth of more than 5% and the acquisition of Kiddylicious, which is included in the consolidation as from August 2018.
This year, the main organic growth, in absolute terms, came from Lotus Biscoff. The internationalization of Lotus Biscoff and Lotus Biscoff Spread remains a robust growth area. With strong growth in the United States (US), the United Kingdom (UK), China, Spain, the Netherlands and the Czech Republic, the Group increased its penetration in these countries in 2018, leaving plenty of room for further growth in the future. A positive factor here is that, with Lotus Biscoff, we are gradually conquering larger markets such as the US and the UK.
The new packaging design for all Biscoff products was very well received and is now available in stores worldwide. At the same time, the Group continues to innovate within the Biscoff concept. For example, the innovation Biscoff & Go, a Biscoff spread dip, was successfully launched in the test market of the US this year.
Natural snacks also experienced double-digit growth once more this year, with turnover reaching the EUR 100 million mark. The growth is due to a combination of the acquisition of Kiddylicious on the one hand and organic growth in the UK and the new countries on the other. TREK grew strongly once more and has earned its place as a major brand in the portfolio in the last few years. Besides their leading market position in the UK, distribution of Nakd and BEAR in supermarkets in the Netherlands and Belgium was further expanded. Nakd will be supported by a TV commercial for the first time in 2019, in both the UK and Belgium. The launch of BEAR in the US is a success. Distribution via the retail channel there is growing steadily.
The gingerbread category in the Netherlands has undergone a transition in the last few years, partly through the introduction of Peijnenburg Zero, the no added sugar version. However, the new products were unable to prevent a decline in penetration of the gingerbread category in the Dutch market. Nevertheless, Koninklijke Peijnenburg's market share remained stable. As category captain, Lotus Bakeries aims to reverse the negative trend and bring about growth in the category once more. The management of Koninklijke Peijnenburg is pursuing an integrated plan to achieve this.
In Belgium, Lotus Bakeries continues to gain market share. This is partly due to our focus on local hero products. For instance, new, modern packaging was introduced across the entire cake range, along with several product innovations, such as the successful launches of Tartélice and Mini Dinosaurus. Waffles maintained their growth momentum too.
France experienced strong growth for waffles and Dinosaurus. Media support for waffles and targeted in-store activation for Dinosaurus delivered good results. The efforts to bring profitability more in line with the group are paying off and form a sound basis for future, profitable growth.
Press release
The recurrent operating result (EUR 95.0 million) and recurrent operating cash flow (EUR 110.3 million) increased by EUR 5.7 million and EUR 6.0 million respectively year on year.
With percentages of 17.1% (REBIT) and 19.8% (REBITDA) respectively compared to turnover, Lotus Bakeries Group confirms once more that solid growth goes hand in hand with stable and high profitability.
The sales teams have been reinforced and expanded to support the international growth of Lotus Biscoff. We have invested strongly in media support and the development of international sales teams for the natural snacking category.
The non-recurrent operating result mainly comprises advice and due diligence costs for the Kiddylicious acquisition, and start-up costs relating to major investment projects such as the factory in the US. This explains why the non-recurrent operating result is EUR -3.0 million this year whereas it was still limited last year.
The financial result of EUR -3.3 million is primarily made up of interest expenses. The difference compared with the previous year is mainly due to negative results for exchange rates on balance sheet positions in foreign currencies (EUR -0.8 million).
The tax expense decreased further to EUR 20.8 million or 23.5% of the result before taxes. The tax expense was reduced compared with the end of 2017 due to the lower rates now applying in Belgium and the US.
The net profit increased by 5% to EUR 67.9 million and stands at 12.2% compared to turnover. The recurrent net result, consisting of the reported net result minus non-recurrent costs, rose by as much as 8.5% to EUR 70.2 million.
In 2018, Lotus Bakeries invested more than EUR 100 million in the acquisition of Kiddylicious and various CAPEX projects. Despite this high cash-out, net financial debt increased by just EUR 39 million to EUR 96 million. This was due to the strong operating cash flow, which ensured that the increase in net financial debt remained limited and that the ratio of net financial debt/REBITDA dropped back to below 1.
As announced at the time of the publication of the half-year figures, the investment plan continues to progress very well. The construction of the manufacturing hall was completed during the second half of the year. The utilities are currently being installed to prepare the factory for the installation of the production lines.
The local management team is now at full strength. Integration and training are in full swing.
The factory will go into operation in the second half of 2019. Then, for the first time, Lotus Biscoff will be made outside Lembeke and even on a different continent.
On 28 March 2018, it was announced that the Lotus Bakeries Group had acquired BEAR's production activities in South Africa from the co-manufacturer, Grassroots. Under the agreement, Grassroots will deliver a brand-new, turnkey production facility by mid-2019. The project team - made up of employees from both Lotus Bakeries and Grassroots - has worked hard during the last few months. Construction is on schedule.
2.6 Other main investments
Lotus Biscoff manufacturing facility in Lembeke expanded: $\Delta$ .
In 2016, a third production hall came into service in Lembeke. In 2018, a second production line started up in that hall. The Lembeke factory has achieved another record: for the first time, output exceeded 50 million kilogrammes. The capacity investments in Lembeke and Mebane (US) are necessary so as to continue to meet the demand for Lotus Biscoff in the future.
Renovation of cake factory in Enkhuizen (Netherlands) finished: b.
In 2017, the first phase of the renovation of the cake factory in Enkhuizen (Netherlands) was completed. Two new warehouses have come into service. In 2018, we also completed the second phase of the upgrade with new, modern offices.
Opening of new office building in Lembeke planned for 2019: $C.$
The construction of the new offices in Lembeke is on schedule. The facilities will go into service in the second half of 2019.
Press release
On 26 July 2018, Lotus Bakeries acquired 100% of the shares of Kiddylicious. This innovative British food company creates delicious, nutritious, portion-controlled snacks for growing babies, toddlers and preschoolers.
The acquisition is perfectly aligned with Lotus Bakeries' strategic vision, focussed on food and health. and aimed at offering a versatile range of snacks. For every consumption moment and across all target groups. Kiddylicious is an excellent strategic fit with the Natural Foods business unit, into which it has therefore been integrated organizationally.
Kiddylicious was founded by Sally Preston, who still runs the business, together with her husband, Neil Mather, as Commercial Director. Both have continued in their roles following the acquisition, demonstrating just as much drive and passion for the brand and the business. Together with their team, they have laid the foundations for integration within Lotus Bakeries.
Sally Preston and Neil Mather have now decided that they wish to hand over their operational responsibilities. Consequently, Twan Thorn, current Global Brand Director at Lotus Bakeries, has been appointed as the new Managing Director of Kiddylicious, with effect from April 2019. Sally Preston and Neil Mather will remain closely involved as non-executive directors on Kiddylicious' board.
In the second half of the year, Kiddylicious grew in line with the high expectations. The brand has thus confirmed its position and potential to become market leader in the baby snacking category in the UK. Kiddylicious is flourishing internationally as well. The first steps towards further growth have already been taken.
CEO Jan Boone: "Through the acquisition of Kiddylicious, Lotus Bakeries has once again demonstrated its strength and speed of execution in a competitive acquisition market for such great growth companies. I would like to thank Sally Preston and Neil Mather for the pleasant cooperation and the passion and dedication with which they have handed over their business. I look forward to their continued contribution as non-executives on the Kiddylicious board."
The Board of Directors will propose to the Ordinary General Meeting of Shareholders of 10 May 2019 to pay a gross dividend of EUR 29 per share for 2018 compared with EUR 19.5 per share in 2017.
CEO Jan Boone: "We propose to pay a gross dividend of EUR 29 per share for 2018. This corresponds to one third of the recurrent net profit and gives us the right balance between providing a decent remuneration for shareholders and reinvesting the profit in the business. We believe that it's important to continue to offer Lotus Bakeries Group every opportunity for development in future, so as to be able to fully realize its strategic ambitions."
Lotus Bakeries continues to focus successfully on its three strategic pillars:
The management and the Board of Directors of Lotus Bakeries are convinced that the current strategy is the right one for us to continue to grow in a sustainable and profitable manner in the long term.
CEO Jan Boone is delighted with the Group's strong organic growth, the successful completion and integration of Kiddylicious and looks forward to the opening of two new production facilities in 2019:
"We continue to focus closely on our three strategic pillars and this is bringing results. Besides organic growth, the Group remains open to targeted and selective acquisitions in the longer term. We're managing to acquire and integrate successful brands and growth companies such as Kiddylicious and - while preserving their uniqueness - make them even stronger within the Group. Lotus Bakeries will take further significant strides forward in 2019. For example, by starting up two new manufacturing facilities on two new continents: the Biscoff factory in the US, and the BEAR factory in South Africa. As a result, by the end of 2019, the Group will have more than 2,000 employees worldwide. Everyone of them an ambassador who joins us in helping Lotus Bakeries develop further."
Financial analysts' meeting: 2018 Annual Review available on www.lotusbakeries.com: Ordinary General Meeting of Shareholders: Dividend payable from: Announcement of 2018 half-year results:
11 February 2019 10 April 2019 10 May 2019 25 May 2019 19 August 2019
Lotus Bakeries in a nutshell
Lotus Bakeries began in the village of Lembeke in 1932 and is now active worldwide in the indulgent and natural snacking segment with the Lotus, Lotus Biscoff, Dinosaurus, Peijnenburg, Annas, Nākd, Trek, BEAR and Kiddylicious brands, among others. Lotus Bakeries, with headquarters in Belgium, is a dynamic, internationally oriented company with production facilities in Belgium, the Netherlands, France and Sweden, and 20 own sales organizations in Europe, America and Asia. Lotus Bakeries also works with commercial partners in approximately forty countries worldwide. Lotus Bakeries has approximately 1,600 employees. By maintaining a healthy balance between tradition and innovation, the Lotus brand indulges consumers with a unique range of high-quality, tasty products. The secret of Lotus Biscoff lies in the biscuit's unique flavour, distinctive design and delightful crispiness. The unique caramelized biscuit flavour has meanwhile also been incorporated into a spread and ice cream. A wide range of cake specialties and waffles are furthermore offered under the Lotus brand name. Koninklijke Peijnenburg is the market leader for gingerbread in the Netherlands and Annas is a typical Swedish speciality of pepparkakor biscuits: thin, crunchy biscuits flavoured with ginger and cinnamon. Under the Nākd, TREK and BEAR brands, Lotus Bakeries offers tasty snacks, manufactured from all-natural, unprocessed ingredients, with no added sugar. Kiddylicious focusses on healthy snacking for babies, toddlers and pre-schoolers. In 2018 the Group achieved a turnover of EUR 556 million. The shares of Lotus Bakeries are listed on Euronext Brussels. The majority of the shares are owned by the Boone and Stevens family.
Jan Boone - CEO Tel. + 3293762614 Mike Cuvelier - CFO Tel. + 32 9 376 26 14
Further information on Lotus Bakeries can be found on www.lotusbakeries.com
For pictures concerning our company Lotus Bakeries, please click on the following link: http://www.lotusbakeries.com/corporate/investor-relations/doclist/media-gallery
| in thousands of EUR | 31/12/2018 | 31/12/2017 |
|---|---|---|
| ASSETS | ||
| Non-current assets | 545,647 | 447,693 |
| Property, plant and equipment | 219,897 | 174,426 |
| Goodwill | 177,639 | 141,001 |
| Intangible assets | 138,887 | 123,924 |
| Participating interests | 2,448 | |
| Investment in other companies | 12 | 12 |
| Deferred tax assets | 3,936 | 4,310 |
| Other non-current assets | 2,828 | 4,020 |
| Current assets | 165,925 | 149,801 |
| Inventories | 39,066 | 33,653 |
| Trade receivables | 71,097 | 60,104 |
| VAT receivables | 4,503 | 4,789 |
| Income tax receivables | 523 | 484 |
| Other amounts receivable | 2,993 | 1,487 |
| Cash and cash equivalents | 45,597 | 48,129 |
| Deferred charges and accrued income | 2,146 | 1,155 |
| TOTAL ASSETS | 711,572 | 597,494 |
| EQUITY AND LIABILITIES | ||
| Equity | 346,927 | 293,213 |
| Share Capital | 16,319 | 15,999 |
| Retained earnings | 369,114 | 316,954 |
| Treasury shares | (11, 406) | (13, 919) |
| Other reserves | (27, 156) | (25, 877) |
| Non-controlling interests | 56 | 56 |
| Non-current liabilities | 198,042 | 193,923 |
| Interest-bearing loans and borrowings | 116,500 | 117,500 |
| Deferred tax liabilities | 52,725 | 49,206 |
| Net employee defined benefit liabilities | 3,519 | 3,846 |
| Provisions | 377 | 414 |
| Derivative financial instruments | 2,319 | 1,970 |
| Other non-current liabilities | 22,602 | 20,987 |
| Current liabilities | 166,603 | 110,358 |
| Interest-bearing loans and borrowings | 36,655 | 1,750 |
| Net employee defined benefit liabilities | 234 | 152 |
| Provisions | 21 | 21 |
| Trade payables | 86,794 | 68,542 |
| Employee benefit expenses and social security | 21,330 | 18,383 |
| VAT payables | 300 | 119 |
| Tax payables | 14,761 | 16,464 |
| Derivative financial instruments | ||
| Other current liabilities | 3,102 | 1,662 |
| Accrued charges and deferred income | 3,406 | 3,264 |
| TOTAL EQUITY AND LIABILITIES | 711,572 | 597,494 |
| in thousands of EUR | 2018 | 2017 |
|---|---|---|
| Turnover | 556,435 | 524,055 |
| Raw materials, consumables and goods for resale | (184, 804) | (171, 494) |
| Services and other goods | (150, 732) | (145, 568) |
| Employee benefit expense | (111, 977) | (105, 580) |
| Depreciation and amortization on intangible and tangible assets | (12, 942) | (12, 105) |
| Impairment on inventories, contracts in progress and trade debtors | (1,706) | (2, 198) |
| Other operating charges | (2, 123) | (3, 168) |
| Other operating income | 2,879 | 5,407 |
| Recurrent operating result (REBIT) (1) | 95,030 | 89,349 |
| Non-recurrent operating result | (3,005) | (91) |
| Operating result (EBIT) (2) | 92,025 | 89,258 |
| Financial result | (3, 324) | (2, 228) |
| Interest income (expense) | (2, 435) | (2,096) |
| Foreign exchange gains (losses) | (596) | 175 |
| Other financial income (expense) | (293) | (307) |
| Profit for the year before taxes | 88,701 | 87,030 |
| Taxes | (20, 829) | (22, 397) |
| Result after taxes | 67,872 | 64,633 |
| NET RESULT | 67,872 | 64,633 |
| attributable to: | ||
| Non-controlling interests | 964 | 1,094 |
| Equity holders of Lotus Bakeries | 66,908 | 63,539 |
| Other comprehensive income: | ||
| Items that may be subsequently reclassified to profit and loss Currency translation differences Gain/(Loss) on cash flow hedges, net of tax Items that will not be reclassified to profit and loss Remeasurement gains/(losses) on defined benefit plans |
(1, 726) (587) (1, 139) 276 276 |
(2, 727) (5,989) 3,262 (757) (757) |
| Other comprehensive income | (1, 450) | (3, 484) |
| Total comprehensive income attributable to: |
66,422 | 61,149 |
| Non-controlling interests | 793 | 449 |
| Equity holders of Lotus Bakeries | 65,629 | 60,700 |
| 2018 | 2017 | |
|---|---|---|
| Earnings per share | ||
| Weighted average number of shares | 803,878 | 799,423 |
| Basic earnings per share (EUR) - attributable to: | ||
| Non-controlling interests | 1.20 | 1.37 |
| Equity holders of Lotus Bakeries | 83.23 | 79.48 |
| Weighted average number of shares after effect of dilution | 808,813 | 808,735 |
| Diluted earnings per share (EUR) - attributable to: | ||
| Non-controlling interests | 1.19 | 1.35 |
| Equity holders of Lotus Bakeries | 82.72 | 78.57 |
| Total number of shares (3) | 815,733 | 814,433 |
| Earnings per share (EUR) - attributable to: | ||
| Non-controlling interests | 1.18 | 1.34 |
| Equity holders of Lotus Bakeries | 82.02 | 78.02 |
(1) REBIT is defined as the recurrent operating result, consisting of all the proceeds and costs relating to normal business.
(2) EBIT is defined as recurrent operating result + non-recurrent operating result.
(3) Total nu
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