Madrid, 28 February 2022. Net turnover was more or less on a par with the previous year, at €2,877.4 million, which can be considered highly satisfactory given the extraordinary effect of compulsive shopping in 2020 and confirms consumer confidence in our brands and high-range products.
Even with a cost inflation of €83 million and after increasing our investment in advertising to €91.4 million, our EBITDA-A stood at €353.5 million, down just 2.9% year on year.
Net profit was up 24% to €238.6 million, partly bolstered by the net gains of €60.7 million generated on the sales of assets in 2021.
Net debt was reduced to €504.7 million, down €446 million on year-end 2020. This includes the payment of ordinary and extraordinary dividends in a sum of €174.9 million, €120 million in CAPEX investments, an increase of €175 million in working capital thanks to the positions taken in raw materials during the year, and the €753 million proceeds on the sale of dry pasta businesses in France and North America.
Core businesses
Rice
The relentless cost inflation in energy, agricultural and auxiliary raw materials and logistics has been the main sticking point of this Division throughout the year.
In raw materials, our key tools for coping with weak European and North American harvests have been diversified sourcing and increased working capital. Nevertheless, we have had to weather a major hike in the cost of aromatic rice varieties, mainly for Riviana and Tilda, not caused by their price at source, but by the soaring ocean freight rates, which have leapt from US$1,000 to US$8,000 per container.
Against this difficult backdrop, the Group’s commitment to convenience foods has become very important again, with continued double-digit growth in sales, underpinning the Group’s profits. An important development in this area is the start-up of our macro plant for rice-in-the-cup products and other value added products at La Rinconada (Seville).
The division posted a turnover of €1,810.5 million and EBITDA-A of €231.7 million.
Pasta
One of the major milestones during the year was the completion of our withdrawal from the North American dry pasta business and the Panzani Group’s dry pasta, sauces and semolina business, focusing now on pasta in the premium, fresh and convenience categories through Garofalo, Lustucru, Olivieri and Bertagni.
In the commodity market, the 50% reduction in the North American harvest triggered an extraordinary price hike in European durum wheat, from €295 per tonne in early August to €540 per tonne now. This is the sharpest inflation experienced in this raw material since 2007.
Just as in the rice business, this Division has had to weather soaring ocean freight rates to the United States, which is a very important market for the Bertagni and Garofalo trade.
From a business standpoint, fresh pasta sales are still very strong in Italy, France and Canada, where our market shares have even increased.
The division posted a turnover of €1,122.2 million and EBITDA-A of €136.5 million.
A model that responds well in tough times
We have closed a year plagued with enormous tough challenges: 1) the successive waves of Covid-19; 2) extreme weather events; 3) significant reduction of harvests; and 4) major hikes in costs (€83 million more than in 2020 and €143 million more than in 2019). Yet we have the satisfaction of having confirmed once again the consistency of our business model, obtaining very positive results similar to those achieved in 2020, which was a record year in our company.
This was made possible by: 1) our diligence in decision-making; 2) the strength of our brands, which continue to consolidate their leadership and increase their market shares; 3) consumer recognition and confidence in the quality and differentiation of our products; 4) diversification and taking adequate positions in raw materials; and finally 5) the good health of the Group’s businesses, which have managed to mitigate the impact of spiralling inflation.
It has been a year of intense work, during which, while riding out the present difficult situation, the Group has forged ahead in the development of its strategy, closing a cycle that culminated with our withdrawal from the dry pasta businesses, and beginning a new one based on a firm commitment to the premium, fresh and convenience segments, in consideration of their greater profitability and better growth prospects.
As 2022 unfolds, it is expected to be even tougher owing to the evolution of inflation, the need to negotiate in order to pass on the increased costs into prices, and droughts, but we trust that our strengths, the generation of synergies and our continuous efforts to streamline costs will stand us in good stead to steer through the year.
