Record sales of Finnish chocolate and liquorice
Many consumers have Finnish Fazer liquorice and candies as a favourite for their Saturday and Sunday cuddles. Turnover in the Finnish Fazer Group's confectionery branch landed at a record level in 2023, but operating profit is heavily burdened by divestments and write-downs in “green business areas”.
"Fazer liquorice is the best in the world," claims a grandmother from Kirkenes who wishes to remain anonymous. "In our youth, we bought kilos of Fazer liquorice in Finland. Absolutely wonderful, she says to Food.”
Maybe she is right? At least the Fazer Group's turnover increased by four percent in 2023, to 1,170.1 million euros. The comparable operating profit (EBITDA) landed at EUR 66.9 million (34.4) and the comparable operating margin 10.6 percent (9.8).
“In 2023, our comparable operating profit clearly recovered from the low levels of the previous year, which is a clear sign of our strong operational ability and a good balance between pricing and strict cost control”, writes CEO Christoph Vitzthum in the financial statements.
Baking and confectionery is good business
The driving forces in Fazer are bakery and confectionery. Fazer bakery increased by seven percent to 462.6 million euros, and Fazer confectionery reached record level of 505 million euros and increase of nine percent.
“Although the market was challenging and characterized by price-conscious consumers, increased competition from PL (private label) and inflationary pressure from raw materials and wages, demand for Fazer's traditional products was good during the year,” concludes Christoph Vitzthum.
The business branch “Fazer lifestyle foods” however fared really bad. Turnover decreased by nine percent to 237 million euros. The fact that Fazer wound down its dairy operations last year explains loss in sales.
In addition, 2023 result is burdened by a large write-down of goodwill within the same business branch, specifically regarding the group's investment in the xylitol factory in Lahti. Divestments and write downs led to a total result of minus 80.9 million euros for the group as such.
Green is nice, but kills profit
The green business idea is to make xylitol (a healthier sweetener) from oat husks that would otherwise go to waste.
So far this is no immediate success, to say the least. However, the CEO has faith in the project. Fazer therefore has decided to put even more investments into xylitol business. Sunken costs are huge, and it has taken longer, and cost more than first planned. Not an unusual phenomenon when developing new and environmentally friendly business concepts.
“Industrializing a ground-breaking innovation has been more challenging than expected. Having said this, we are strongly committed to the xylitol business, which we continue to develop, declares Christoph Vitzthum.”
Sources: Fazer and others.