ORIOR, the Swiss leader for fresh convenience food and refined meat products, performed well in the face of an extremely challenging market environment in 2015. Revenues declined but operating profit and margins improved, operating cash flow increased significantly and the balance sheet metrics were strengthened once again. These results confirm that ORIOR has successfully started the new chapter and – true to its commitment towards a strong financial profile – created a strong foundation for future growth and the continuation of its attractive dividend policy.
ORIOR Group generated revenues of CHF 500.1 million in 2015, which represents a decline of 4.1% or 3.6% at constant exchange rates (previous year: CHF 521.6 million). This can be traced primarily to the contraction of the Swiss retail and food service markets, especially along the border and in the tourist regions. A more sharply focused product portfolio and a steadfast focus on sustainable and profitable growth were also contributing factors; they represent an important investment in future growth and margins. EBITDA increased by 1.3% to CHF 48.7 million and the corresponding margin widened by 52 basis points to 9.7% (previous year: CHF 48.0 million). Thanks to slightly lower depreciation and amortisation, operating profit (EBIT) rose by 4.1% to CHF 33.8 million and the EBIT margin advanced by 54 basis points to 6.8% (previous year: CHF 32.5 million). Profit before tax rose by 5.0% to CHF 31.3 million; net income, however, declined slightly by 3.5% to CHF 25.6 million (previous year: CHF 26.5 million) or CHF 4.32 per share due to negative currency effects and higher taxes. ORIOR generated a sharply higher operating cash flow, which jumped 45.6% to CHF 41.7 million (2014: CHF 28.6 million). The equity ratio was increased once again and stood at 58.6% at the end of the reporting period.
Another slight increase in the dividend
The Board of Directors will, for the fifth consecutive year, propose an increase in the dividend to CHF 2.03 per share at the Annual General Meeting on 12 April 2016. This corresponds to a payout ratio of 47.0%. Within the scope of the ORIOR 2020 strategy, the attractive dividend policy was reaffirmed. The proposed dividend will be paid out from capital contribution reserves and is therefore exempt from Swiss withholding tax.
Business review by segment
ORIOR Convenience, the specialist for fresh convenience food with its three competence centres Fredag, Le Patron and Pastinella, could not quite repeat its strong top-line and earnings performance from the previous fiscal year. Its fresh ready-made dishes continued to sell well, as did its entire line of vegetarian and vegan products. Fresh pasta products experienced intense market pressure and these revenues showed another year-on-year decline. Business with terrine specialities grew thanks to new creations such as terrines in jars and other novelties from the “Le Patron” brand. Overall, the Convenience segment reported a slight 2.1% decline in revenues to CHF 202.7 million. Resulting EBITDA of CHF 27.7 million corresponds to a margin of 13.7% compared to 14.3% in the previous year.
The Refinement segment and its competence centres Rapelli, Albert Spiess and Möfag achieved revenues of CHF 298.5 million, a decline of 5.6% versus the previous year. This contraction can be traced to lower raw material prices and the resulting price concessions as well as to portfolio streamlining with a focus on growth and margins. Low raw material prices had a positive impact on profitability, however, which improved despite the negative inflation. Intensified brand management and higher marketing investments lifted the revenues of the branded products. Segment EBITDA rose by 4.9% to CHF 23.5 million, resulting in an EBITDA margin of 7.9% (2014: 7.1%).
The ORIOR Corporate and Export segment's results for 2015 were unable to match the figures from the preceding year.. The appreciation of the Swiss franc is the main reason for the shortfall, as this diminished the export chances of specialities made in Switzerland and led to a deterioration in the general business environment. Together with the absence of revenues from the logistics company Lineafresca, divested in May of 2014, revenues in the Corporate and Export segment therefore declined to CHF 21.3 million from CHF 26.0 million in the previous year. At constant exchange rates and factoring out the deconsolidation of Lineafresca, revenues increased by 2.9% despite the challenging export situation.
Orior 2020 Strategy
ORIOR's new management launched a strategy review headlined “ORIOR 2020” in May 2015. In September the new strategy was presented and the execution initiated. The principal aim of the strategy is steady value creation. With its key pillars “House of Innovation”, “Brand strengthening and expansion”, “Agility and cost efficiency”, “The ORIOR responsibility” and “We are ORIOR”, the revised strategy lays the foundation for a sustainable and profitable continuation of ORIOR's success story.
Important steps taken
Innovation is crucial for future success and also for maintaining a pivotal role in shaping the market landscape. Innovation is going beyond the product into new concepts, services and processes. With this in mind, innovation is now – under the oversight and management of the Group Innovation Manager – being advanced throughout the whole value chain and across all competence centres.
Additionally, ORIOR signed a licensing and cooperation agreement with the German veggie pioneer Tofutown. Beginning 1 March 2016, ORIOR's “Nature Gourmet” products will be exclusively produced and marketed by Tofutown for the German, Austrian and Luxembourg markets.
Change in the Board of Directors
Rolf Friedli, the long-standing Vice Chairman of the Board of Directors of ORIOR AG, will not be standing for re-election at the Annual General Meeting on 12 April 2016. He has served on the board for more than ten years and helped ORIOR to set important milestones during this period. The Board of Directors, Executive Management and the employees are grateful to Rolf Friedli for his extraordinary services. The Board of Directors of ORIOR AG will propose entrepreneur Walter Lüthi for election to the Board of Directors as a new director at the Annual General Meeting on 12 April 2016.
We expect the trading environment to remain challenging in 2016. Swiss retailers and food service providers will remain under pressure and vulnerable to general economic developments. We expect – particularly in the first half of the year – further price markdowns, pressure from imports, unabated cross-border shopping, and a further deterioration in consumer sentiment. As for raw materials, prices for beef are expected to remain high due to persisting supply constraints. Pork prices could edge higher during the course of 2016. To address these challenging conditions, we will continue to focus our attention on innovation, portfolio management and cost efficiency in 2016. We will intensify our innovation at the product level and beyond to include concepts, services and processes, with the objective of capturing the changing consumer eating habits and maintaining our position in the vanguard of market developments. The philosophy of the competence centres puts us in uniquely close contact with customers and the market, which, in turn, allows us to react quickly and with agility. Together with the new strategy and group-wide initiatives and measures that have been taken, ORIOR laid a broad and sturdy foundation from which it can look with confidence to what will undoubtedly be a very challenging future.
ORIOR Group's key figures for the 2015 financial year
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