German baking goods company, Dr Oetker, has reported a 12.3% increase in sales to €3.39 billion for the 2019 financial year. Adjusted for acquisitions and exchange rate fluctuations, growth for the year reached 4.5%.
Despite a weakening global economy, Dr Oetker continued to expand its international business with a number of acquisitions, including Confetti in Finland and Bagetid in Denmark.
“The company also saw organic growth and gains in market share,” explained Dr Albert Christmann, chairman of the Dr Oetker management board.
Regional development
He said that the company saw the largest sales growth in Germany, due to the development of its baked goods, fresh and powdered desserts, as well as pizza brands. In contrast, business in the Müsli division fell short of expectations.
Sales in Western Europe also recorded growth due to the acquisition of the Alsa brand in France, the Netherlands, Belgium and Portugal.
Despite Brexit, the company performed well in the UK. However, sales in Denmark suffered due to “differing opinions regarding the marketing of the products”.
Sales growth in Eastern Europe was driven by development in Poland, both in the cake and dessert category, as well as the pizza category. In addition, operations in Romania, the Czech Republic and Hungary saw organic growth.
Outside of Europe, the Americas region recorded a sharp increase in sales compared with the previous year. The Asian, African and Australian regions, in particular, benefitted from the double-digit organic growth figures in India, South Africa and South Korea.
In 2019, Dr Oetker invested €149 million in the expansion of plant and warehouse capacity at its international locations in the UK, Canada and South Africa.
Outlook
According to Christmann, prior to the global measures implemented to contain the Covid-19 pandemic, growth for Dr Oetker was expected to be at least in line with the previous year.
While the Oetker professional and decor businesses suffered losses, the group’s pizza and bakery goods division saw a boost, due to consumers stockpiling products prior to the implementation of lockdown measures.
"The completely uncertain course of the [Covid-19] pandemic makes it very difficult to give a valid forecast for the course of the business year 2020," said Christmann.
“The expected significant economic [impact] of the [Covid-19] crisis will also affect us as a food manufacturer. In all companies, we therefore took extensive measures at an early stage in order to compensate for lost sales as much as possible, and to safeguard [the company] through cost measures.
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