Earnings Release • Feb 24, 2023
Earnings Release
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BE- Lievegem, 24 February 2023 – 07:30
***
Despite difficult market conditions with high inflation putting pressure on purchasing power and the occasional supply chain challenges due to raw material unavailability, the group managed to increase consolidated turnover by 12% from EUR 697 to 781 million. The transparent pass-through of cost increases, in addition to continuous cost control, was a crucial factor for this result, especially in the second half of 2022.
CEO Piet Sanders reacts to the 2022 results: 'The total cost increases approached a figure equal to double our 2021 EBITDA. The challenge was tremendous. The fact that we still managed to achieve around 5% underlying EBITDA on sales is a real achievement by the entire Ter Beke team which sought to create winwin partnerships with our stakeholders.'
The underlying EBITDA results show a gradual recovery in Ready Meals financials in the second half of the year 2022. This was achieved thanks to a responsible pass-through of cost increases by improving operational performance. Underlying results in the Savoury segment (previously Processed Meats segment) were slightly down in the second half, mainly due to the impact of high inflation and slightly declining demand for Savoury products.
Non-underlying costs (EUR 2.3 million in total for 2022) in the current financial year consist entirely of expenses incurred in connection with the proposed acquisition of Imperial-Stegeman. This acquisition is still pending approval by the Belgian and Dutch competition authorities. In the previous financial year the nonunderlying costs (EUR 6.9 million) were significantly higher and included costs linked to the proposed acquisition as well as costs related to the sale of the captive reinsurance company in Luxembourg and the change in CEO.
| In mio EUR | 2021 | 2022 | Difference (%) |
|---|---|---|---|
| Net Sales | 696.9 | 781.4 | +12.1 |
| U-EBITDA | 52.8 | 38.1 | -27.8 |
| EBITDA | 45.9 | 35.9 | -21.8 |
| U-EBIT | 24.0 | 9.9 | -58.8 |
| EBIT | 17.1 | 7.6 | -55.6 |
| Result of the financial year after taxes | 7.3 | 4.5 | -38.4 |
Net financial debts were further reduced by EUR 6 million from EUR 73.8 million to EUR 67.8 million.
As expected, inflation had a great impact on our results, both in the first but even more so in the second half of 2022. The cost of animal proteins rose due to soaring feed and energy prices and because of avian flu and upticks in African swine flu. These increases affected beef, pork and poultry as well as derived products such as milk, cheese, etc. Packaging prices also rose sharply due to higher energy costs, among others. The main ingredients of our ready meals also experienced sharp price increases and the availability of ingredients was complicated by the impact of the war in Ukraine, rising energy prices and persistent drought or difficult weather conditions in large parts of Europe. Tomatoes for example remain scarce, and durum wheat (used in the production of our own pasta) became significantly more expensive and while the cost of most other ingredients also increased dramatically. Ter Beke continues to work on a sustainable passthrough of these cost increases along the chain. At the same time, it is also working on optimizations to minimize cost increases for consumers.
To make the timely pass-through of inflation/deflation of costs transparent, most new contracts were concluded for a limited time period only or included an automatic indexation of the cost of key raw materials.
The war in Ukraine has almost no direct impact on Ter Beke as our direct purchases and sales from / to Ukraine and Russia were very limited. The group immediately halted ongoing plans to expand sales to Russia at the start of the war. Indirectly, however, it did have implications - mainly because of urging energy prices and inflation of our ingredients, packaging and other costs. In terms of energy, the impact was somewhat limited thanks to a number of hedges that were executed earlier. However, the upward trend in costs was and still is very apparent.
Business unit turnover increased by 5% from EUR 422.9 million to EUR 442.5 million, mainly due to the responsible (but delayed) pass-through of cost increases. Volumes in the business unit decreased, mainly due to the drop in consumption and the non-renewal of a number of contracts. The total pass-through of cost increases was, as already indicated, delayed after the first half of the year.
With respect to the new strategic plan, which aims to broaden the product portfolio, the segment was rebranded 'Savoury'. This name better reflects of the broader range of products in which the group wishes to continue to invest. This product portfolio also includes hybrid, vegetarian and plant-based products, which will gradually increase in importance within the category over time.
The combination of the delayed pass-through of cost increases and the additional operational efforts to continue serving customers in very difficult market circumstances as well as the loss of volume caused a 27% decline in the segment's underlying EBITDA result, from EUR 28.9 million in 2021 to EUR 21.0 million in 2022.
The proposed acquisition of Imperial-Stegeman (pending approval) should enable the Strategic Business Unit to market branded products alongside its private label products portfolio. In addition, The sale of vegetarian, hybrid (meat and vegetables) and plant-based products, as well as the sale of snacking products in the Benelux and beyond should accelerate following the acquisition. It would also benefit innovation in the entire category.
Revenue within the Ready Meals SBU increased by 24% from EUR 274.09 million to EUR 338.9 million, mainly due to the –albeit delayed- pass-through of cost increases and the further recovery of the foodservice business post-pandemic. Our new products for the UK market also performed well, fueling the recovery. Volumes held up well in retail and shop price inflation did not cause a decline in consumption to date. Our product portfolio provides nutritional products for every budget. The impact of temporary supply issues on customers was very limited and logistics teams performed solidly in what were very challenging external market conditions.
The high inflation and the delayed pass-through of cost increases triggered a decrease in underlying EBITDA of the segment by 22%, from EUR 28.4 million to EUR 22.0 million in 2022.
The group continued to invest in new products and extensions of existing product ranges. The roll-out of the Come a Casa brand in Eastern Europe is also on track, partly thanks to the earlier expansion at our facility in Opole, Poland. Also in the Ready Meals SBU, the new strategy will ensure a further product range extension including vegetarian and plant-based dishes, continuing to build on earlier successful launches by the group in the UK.
The Board of Directors will propose to the General Shareholders Meeting to maintain the gross dividend per share for 2022 at EUR 4.00 in the form of a scrip dividend.
None
The group has already begun implementing the new multi-year strategic plan to achieve sustainable growth in the future in addition to high quality, 'giving total peace of mind' to its customers This strategy will also focus on innovations in existing and new products. The investment in start-up Davai, which produces tasty vegetable dumplings, is part of this strategy, alongside other strategic pillars such as the creation of a group R&D team, the focus on operational excellence, as well as the focus on brands, digitization and process harmonization.
The first benefits of this new group strategy are expected in 2023,although in 2022 a number of major steps were already taken to make products and processes more sustainable. Under the guidance of the sustainability manager, efforts were made to build a dual materiality matrix and KPIs and targets were set that are monitored through a sustainability platform. 'Ambassadors' were also appointed at all sites and numerous ESG activities (Environmental, Social and Governance) and initiatives were launched. We calculated the group's Corporate Carbon Footprint and the detailed Carbon Footprint of the core products in order to respond even better to the demands of our customers and consumers and to contribute to more sustainable food production together with our vendors.
As a result of a number of contracts that could not be renewed, Ter Beke expects volumes in Savoury products to decline slightly in 2023. At the operational level, the group will adapt to these new circumstances and actively continue to seek additional volumes to ensure further growth and corresponding coverage of overheads. The group will also continue to invest in supply chain optimizations to work with our customers and offer consumers a high-quality and affordable product as well as in innovations that can offer consumers a more nutritional and sustainable choice. Barring unexpected circumstances, the group expects the segment's U-EBITDA to land somewhere between the 2021 U-EBITDA and that of 2022.
The group expects segment results for Ready Meals to improve significantly as contract extensions reflect the increased input costs and were also either limited in time to reflect any additional inflation or included an automatic indexation mechanism for key ingredients. With its high level of automation, Ter Beke is now also reaping the benefits of its investments of recent years. Barring unforeseen circumstances, the group expects the segment's U-EBITDA to gradually catch up with the 2021 U-EBITDA.
The group expects an increase in corporate costs due to the roll-out of the new strategy, including an increased focus on sustainability, R&D, digitization and further professionalization of human resources. These costs are believed to contribute to future results as indicated above.
Providing an outlook in times of uncertainty on commodity availability and inflation is always a difficult task. The general scarcity of specific raw materials, ingredients, and packaging materials may in some cases lead to supply issues due to force majeure. With overall shorter contract periods, additional or lost sales volumes may impact the group's results more quickly than in the past.
| Consolidated key figures in 000 EUR | 2022 | 2021 | ∆% |
|---|---|---|---|
| Revenue (net turnover) | 781 385 | 696 906 | 12,1% |
| UEBITDA (1) | 38 120 | 52 806 | -27,8% |
| EBITDA (2) | 35 861 | 45 939 | -21,9% |
| Underlying operating result (UEBIT) | 9 906 | 24 016 | -58,8% |
| Operating result (EBIT) | 7 647 | 17 149 | -55,4% |
| Net financing costs | -1 449 | -3 652 | -60,3% |
| Operating result | |||
| after net financing costs (EBT) | 6 198 | 13 497 | -54,1% |
| Taxes | -1 589 | -6 164 | -74,2% |
| Result after tax before share in the result of enterprises | |||
| accounted for using the equity method | 4 609 | 7 333 | -37,1% |
| Share in enterprises accounted for using the equity | |||
| method | -89 | 0 | |
| Earnings after taxes (EAT) | 4 520 | 7 333 | -38,4% |
| Financial position in 000 EUR | |||
| Total assets | 404 459 | 381 805 | 5,9% |
| Equity | 120 573 | 121 445 | -0,7% |
| Net financial debt (3) | 67 756 | 73 763 | -8,1% |
| Equity/Total assets | 29,8% | 31,8% | -6,3% |
| Gearing ratio (4) | 56,2% | 60,7% | -7,5% |
| In EUR per share | |||
| Number of shares | 1 821 006 | 1 794 217 | 1,5% |
| Average number of shares | 1 807 722 | 1 780 860 | 1,5% |
| Net cash flow per share (5) (6) | 18,16 | 20,28 | -10,5% |
| Consolidated Earnings after taxes (5) | 2,33 | 4,12 | -43,4% |
| EBITDA per share (5) | 19,84 | 25,80 | -23,1% |
(1) UEBITDA: EBITDA from current operating activities
(2) EBITDA: result from operating activities + depreciation + amortization + movements in provisions
(3) Net financial debts: interest-bearing debts - interest-bearing receivables, cash and cash equivalents
(4) Gearing ratio: Net financial debt/Equity
(5) Ratio always based on the average weighted number of shares in the financial year.
(6) The net cash flow consists of the result of the financial year excluding the contribution in the changes in equity plus (minus) non-cash expenses (revenues).
The increase in goodwill was mainly due to the evolution of the British Pound against the Euro.
The decrease in tangible and intangible fixed assets is mainly due to further depreciation of (in)tangible assets and the lower value of the British Pound against the Euro.
The group invested EUR 23.4 million in fixed assets in 2022 compared to EUR 18.8 million over the same period in 2021. This mainly involved continuing efficiency investments, infrastructure and refrigeration adjustments and other investments to improve the sustainability of our sites and production. In the previous year, a number of investments were shifted over time due to the pandemic and material availability.
The increase in participations by EUR 0.4 million was a consequence of the investment in startup Davai BV. (Davai is a producer of plant-based snacks in which Ter Beke took a 50% stake in the first half of 2022).
Net financial debts decreased by EUR 6.0 million to EUR 67.8 million. This decrease is achieved through an improvement in working capital despite a lower operating cash flow and higher investments compared to last year. Last year also included a negative cash flow resulting from the sale of the captive insurance company which was one-off in nature. (outflow EUR 3.9 million). The impact of the net payment of the scrip dividend remained almost the same in both financial years.
Net cash flow from operating activities was EUR 36.6 million, lower than that of 2021 (EUR 50.8 million), mainly due to the lower result before tax as well as the fact that the group sold a number of unused buildings in 2021.
The calculation of net financial liabilities as at 31 December 2022 and 2021 is as follows:
| in EUR'000 | 31/12/2022 | 31/12/2021 |
|---|---|---|
| Cash and cash equivalents Long-term interest-bearing liabilities Short-term interest-bearing liabilities |
-19 353 84 317 2 792 |
-11 544 79 728 5 579 |
| Net financial debts | 67 756 | 73 763 |
Key notes to the results were provided in the headlines section above.
UEBIT and UEBITDA - reflecting recurring or underlying business performance - are now called underlying EBIT or underlying EBITDA respectively. Their calculation for Ter Beke is as follows:
| Result of operating activities In EUR'000 |
||
|---|---|---|
| 31/12/2022 | 31/12/2021 | |
| EBITDA Depreciations costs and impairments |
35 861 -27 833 |
45 939 -28 468 |
| Impairments, write-offs and provisions | -381 | -322 |
| Result of operating activities (EBIT) | 7 647 | 17 149 |
| 31/12/2022 | 31/12/2021 | |
|---|---|---|
| Result of operating activities (EBIT) Costs of acquisitions Costs due to change in CEO Impact sale captive TB Luxemburg Underlying operating result (UEBIT) |
7 647 2 259 9 906 |
17 149 1 754 875 4 238 24 016 |
| EBITDA | 35 861 | 45 939 |
| Costs of acquisitions | 2 259 | 1 754 |
| Costs due to change in CEO | 0 | 875 |
| Impact sale captive TB Luxembourg | 0 | 4 238 |
| Underlying EBITDA | 38 120 | 52 806 |
The auditor, KPMG Bedrijfsrevisoren BV, represented by Filip De Bock, has confirmed that its audit procedures, which have been substantially completed, have not revealed any material misstatement in the accounting data included in the present report.
General Shareholders Meeting May 25, 2023
Results HY1 2023 August 25, 2023
Piet Sanders* Yves Regniers° CEO CFO *Permanent Representative Leading for Growth BV °Permanent Representative ESROH BV
Ann De Jaeger General Counsel & Corporate Affairs Director Tel. +32 9 370 13 17 [email protected]
Ter Beke is an innovative European fresh food group headquartered in Belgium, marketing a wide range of quality fresh food products and related services in numerous European countries. Today, Ter Beke mainly specializes in the production and sale of fine meats and freshly prepared meals at 12 industrial sites in Belgium, the Netherlands, France, Poland and the UK. Ter Beke employs approximately 3,000 people. Ter Beke has existed for almost 75 years, has been listed on Euronext Brussels as a familyowned company since 1986 and realized a turnover of EUR 781 million in 2022.
For more information about Ter Beke, go to www.terbeke.com.
Annual Results 2022 February 24, 2023 before market opening
Annual Report 2022 April 21, 2023 before market opening
Financial year ending on 31 December 2022 and 2021
| 2022 | 2021 | |
|---|---|---|
| Revenue | 781 385 | 696 906 |
| Trade goods, raw and auxiliary items | -495 220 | -415 414 |
| Services and miscellaneous goods | -120 664 | -110 131 |
| Employee expenses | -130 826 | -122 696 |
| Depreciation costs | -27 833 | -28 468 |
| Impairments, write-downs, and provisions | -381 | -322 |
| Other operating income | 3 617 | 3 892 |
| Other operating expenses | -2 431 | -6 618 |
| Result of operating activities | 7 647 | 17 149 |
| Financial income | 1 305 | 717 |
| Financial expenses | -2 754 | -4 369 |
| Results of operating activities after net financing expenses | 6 198 | 13 497 |
| Taxes | -1 589 | -6 164 |
| Result for the financial year before result from equity accounted investees | 4 609 | 7 333 |
| Share in the result of equity accounted investees | -89 | 0 |
| Result for the financial year | 4 520 | 7 333 |
| Result for the financial year: share third parties | 299 | -13 |
| Result for the financial year: share group | 4 221 | 7 346 |
| Basic earnings per share * | 2,33 | 4,12 |
| Diluted earnings per share * | 2,33 | 4,12 |
| Based on the weighted average number of shares in the year |
PRESS RELEASE Regulated information
| driven by the zeal for your everyday meal | ||||||||
|---|---|---|---|---|---|---|---|---|
| ------------------------------------------- | -- | -- | -- | -- | -- | -- | -- | -- |
| Consolidated balance sheet Financial year ending on 31 December 2022 |
||
|---|---|---|
| and 2021 | ||
| In EUR'000 | 2022 | 2021 |
| Assets | ||
| Non-current assets | 225 726 | 231 701 |
| Goodwill | 77 871 | 78 332 |
| Intangible non-current assets | 17 306 | 20 464 |
| Tangible non-current assets | 121 650 | 124 978 |
| Participations using equity method | 431 | |
| Deferred tax assets | 8 392 | 7 852 |
| Other long-term receivables | 76 | 75 |
| Current assets | 178 733 | 150 104 |
| Inventories | 46 889 | 38 596 |
| Trade and other receivables | 112 491 | 99 964 |
| Cash and cash equivalents | 19 353 | 11 544 |
| Total assets | 404 459 | 381 805 |
| Liabilities | ||
| Shareholders' equity | 120 573 | 121 445 |
| Capital and share premiums | 62 197 | 59 572 |
| Reserves | 56 494 | 60 196 |
| Non-controlling interest | 1 882 | 1 677 |
| Deferred tax liabilities | 5 615 | 6 525 |
| Long-term liabilities | 87 759 | 87 993 |
| Provisions | 3 442 | 3 878 |
| Long-term interest-bearing liabilities | 84 317 | 79 728 |
| Other long-term liabilities | 0 | 4 387 |
| Current liabilities | 190 512 | 165 842 |
| Current interest-bearing liabilities | 2 792 | 5 579 |
| Trade liabilities and other payables | 162 156 | 138 132 |
| Social liabilities | 22 567 | 20 257 |
| Tax liabilities | 2 997 | 1 874 |
| Total liabilities | 404 459 | 381 805 |
| Consolidated cash flow statement in EUR'000 as at 31 December 2022 and 2021 |
||
|---|---|---|
| 2022 | 2021 | |
| Operating activities | ||
| Result before taxes | 6 198 | 13 497 |
| Interest | 1 322 | 2 000 |
| Depreciation costs and impairments | 27 833 | 28 468 |
| Write-downs (*) | 102 | 567 |
| Provisions | -58 | -27 |
| Gains & losses on disposal of fixed assets | -64 | 3 812 |
| Cash flow from operating activities | 35 333 | 48 317 |
| Decrease/(increase) in receivables more than 1 year | ||
| Decrease/(increase) in inventory | -8 888 | -687 |
| Decrease/(increase) in receivables less than 1 year | -12 662 | -334 |
| Decrease/(increase) in operational assets | -21 550 | -1 021 |
| Increase/(decrease) in trade liabilities | 22 759 | 6 488 |
| Increase/(decrease) in debts relating to remuneration | 2 247 | 2 003 |
| Increase/(decrease) in other liabilities, accruals and deferred income | -426 | -1 126 |
| Increase/(decrease) in operational debts | 24 580 | 7 365 |
| (Increase)/decrease in the operating capital | 3 030 | 6 344 |
| Tax paid | -1 750 | -3 901 |
| Net cash flow from operating activities | 36 613 | 50 760 |
| Investment activities | ||
| Acquisition of intangible and tangible non-current assets | -25 082 | -19 279 |
| Acquisition of shares in participations | -520 | |
| Total increase in investments | -25 602 | -19 279 |
| Sale of intangible and tangible non-current assets | 818 | 5 112 |
| Sale of shares in participations | -3 900 | |
| Total decrease in investments | 818 | 1 212 |
| Cash flow from investment activities | -24 784 | -18 067 |
| Financing activities | ||
| Increase/(decrease) in short-term financial debts | -1 367 | -1 451 |
| Increase in long-term debts | 8 996 | 921 |
| Repayment of long-term debts | -5 632 | -33 316 |
| Interest paid interest (via income statement) | -1 322 | -2 000 |
| Acquisition of non-controlling interest | 0 | -266 |
|---|---|---|
| Capital increase (decrease) (**) | 2 625 | 2 791 |
| Dividend paid by parent company (***) | -7 177 | -7 069 |
| Cash flow from financing activities | -3 877 | -40 390 |
| Net change in cash and cash equivalents | 7 952 | -7 697 |
| Cash funds at the beginning of the financial year | 11 544 | 19 143 |
| Translation differences | -143 | 98 |
| Cash funds at the end of the financial year | 19 353 | 11 544 |
(*) Also includes adjustments that are part of the financial result. This was -337 KEUR in 2022 and 219 KEUR in 2021 (**) Share Capital increase following Scrip Dividend: shareholders choosing for shares rather than cash
| in EUR'000 | Savoury | 2022 Ready Meals |
Total |
|---|---|---|---|
| Segment income statement | |||
| Segment net turnover | 442 518 | 338 867 | 781 385 |
| Segment results Non-allocated results Net financing cost Taxes |
2 325 | 11 456 | 13 781 -6 134 -1 449 -1 589 |
| Share in businesses accounted for using the equity method Consolidated result |
-89 4 520 |
||
| Segment balance sheet | |||
| Segment non-current assets Non-allocated non-current assets Total consolidated non-current assets |
110 575 | 109 985 | 220 560 5 166 225 726 |
| Segment liabilities Non-allocated liabilities Total consolidated liabilities |
112 785 | 73 122 | 185 907 218 552 404 459 |
| Other segment information | 404 459 | ||
| Segment investments (*) Non-allocated investments Total investments |
13 732 | 8 756 | 22 488 886 23 374 |
| Segment depreciation and non-cash costs Non-allocated depreciation and non-cash costs Total depreciation and non-cash costs |
16 281 | 10 539 | 26 820 1 394 28 214 |
| (*) Investments including new capital grants |
| Comparable Segment information in EUR'000 |
Savoury | Ready Meals |
Not Allocated |
Total |
|---|---|---|---|---|
| EBIT 2022 | 2 325 | 11 456 | -6 134 | 7 647 |
| EBIT 2021 | 11 985 | 17 691 | -12 527 | 17 149 |
| Variance | -9 660 | -6 235 | 6 393 | -9 502 |
| EBITDA 2022 | 18 606 | 21 995 | -4 740 | 35 861 |
| EBITDA 2021 | 28 907 | 28 373 | -11 341 | 45 939 |
| Variance | -10 301 | -6 378 | 6 601 | -10 078 |
| Non-Underlying 2022 U-EBIT U-EBITDA |
-2 354 -2 354 |
95 95 |
-2 259 -2 259 |
|
| Comparable Segment information | Savoury | Ready Meals |
Not Allocated |
Total |
| UEBIT 2022 | 4 679 | 11 456 | -6 229 | 9 906 |
| UEBIT 2021 | 11 985 | 17 691 | -5 660 | 24 016 |
| Variance | -7 306 | -6 235 | -569 | -14 110 |
| UEBITDA 2022 | 20 960 | 21 995 | -4 835 | 38 120 |
| UEBITDA 2021 | 28 907 | 28 373 | -4 474 | 52 806 |
| Variance | -7 947 | -6 378 | -361 | -14 686 |
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