Strong cash flow with good underlying growth in the business
Comment by the CEO
Continued expansion in Europe
2019 was a year of major changes and the year that we continued our European expansion. Through the acquisitions of Eisblümerl and Alimentation Santé, we are now well represented in the key markets of Germany, France and Spain and are strengthening our position in organic and plant-based foods. The acquisitions also provide a solid base for continued European expansion.
I would like to take this opportunity to express our gratitude for the trust given to us in the rights issue in the fourth quarter that made the acquisition of Alimentation Santé possible. During the year, a new long-term financing agreement was also entered that provides conditions for continued growth.
On the whole, I am pleased with 2019; most of what we could control ourselves went according to plan and occasional external setbacks were managed in the best way possible. It was pleasing to see that both the sales and earnings outcomes were positive during the year.
Good end to an eventful year
In the fourth quarter, total sales increased, as well as the sales in our eight prioritised brands, by 9 percent. Friggs continued to have the strongest growth and we saw good development for our organic brands.
As a result of our expanded product portfolio, we will review the composition of our prioritised brands in the first quarter. In addition, our European expansion has brought us to reorganize into three divisions to better reflect our main markets: the Nordic region, Northern Europe and Southern Europe. We will report these units beginning with the first quarter of 2020.
During the year, major efforts were also made to harmonize the organic portfolio, which will be launched gradually beginning in 2020.
Our three geographic units developed well
We are very pleased with the development in Southern Europe. Sales were indeed slightly lower than expected, which was partly due to transport problems related to the French strike and partly to a product recall of gluten-free products in Spain. In spite of this, we had strong earnings. We also see that the effects of the strike, which at the writing of this is not over, are decreasing over time.
Sales developed positively in Germany despite a continued raw material shortage in peanuts and almonds, with lower sales of these product groups and higher raw material prices as a result. Earnings were also weighed down by integration costs related to the acquisition of Eisblümerl. In terms of the raw material shortage, we returned to normal at the beginning of 2020.
In terms of sales, we saw a decline in the Nordic countries in the fourth quarter mainly because we continued to see a negative effect from the concluded Alpro agreement. The exception was Denmark, which had good sales growth during the period. The exchange rate movement also continued to be unfavourable. In terms of earnings, we succeeded in fully compensating the sales decrease and negative currency effects through the positive impact of the Nordic cost-savings programme. Implemented price increases will gradually have an effect in the first quarter of 2020.
Strong financial position
Altogether, we had a good quarter in terms of earnings and it was pleasing that this was also visible in a strong cash flow, which was also strengthened by active work to reduce the working capital. In light of our stable financial position, the Board of Directors has decided to propose to the Annual General Meeting an unchanged dividend per share of SEK 1.25 per share. Today, Midsona has more than 40 percent more shares than at the same time in the previous year, which means that the proposed divided of just over SEK 81 million in absolute figures is significantly higher than the previous year's dividend.
Focus on integration with a strong base for acquisitions
We are entering 2020 with a focus on plant-based and organic products and a clear ambition to expand in Europe. Even if the work will initially be characterised by integration, I see good opportunities for more European acquisitions in parallel with strong growth and profitability. I look forward to the future with confidence.
President and CEO
This is information of the type that Midsona AB is obligated to make public in accordance with the EU Market Abuse Regulation. The information was submitted for publication through the agency of Lennart Svensson on 6 February 2020 at 8 am CET.
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