Review of Group Results
With EBIT of CHF 30.3 million, the Valora Group concluded the 2021 financial year well in line with its communicated guidance. This corresponds to a year-on-year increase of +115.5 % or CHF +16.2 million. In addition, Valora returned to a positive Group net profit of CHF 8.3 million after a negative CHF –6.2 million in the prior year. The Group generated a free cash flow of CHF 25.1 million and underlined its strong balance sheet with an improved equity ratio of 51.0 % (2020: 47.3 %) and a leverage ratio of 2.2x EBITDA (2020: 2.5x EBITDA).
Particularly at the beginning of the year 2021, Valora’s business was again strongly impacted by governmental restrictions to contain the COVID-19 virus in Valora’s geographies. The Group was therefore forced to maintain reduced opening hours and keep some of its outlets closed. In the period March to June, recovery gained traction thanks to the easing of governmental orders and vaccination progress. During the second half of the year, recovery progressed further, most notably in the food category. While food net revenue had remained –26 % below its pre-crisis level of 2019 in the first half of the year, it rebounded to –5 % in the second half of 2021. The most pronounced catch-up effect was realised in the Food Service division with a substantial operating leverage effect on profitability and EBIT clearly above break even again. As a result, in the second half of 2021, Food Service EBITDA margin rebounded to 76 % of its pre-crisis level.
As of November 2021, the acquired German-based snack specialist Back-Factory was consolidated to the Group’s results and contributed with a small positive EBIT, offset by related transaction costs.
For the 2021 financial year as a whole, including the two additional COVID-19-affected months of January and February, net revenue increased by +3.1 % while external sales remained fairly stable. For March to December – the comparable period that was impacted by the COVID-19 crisis in both years – year-on-year growth was +8.9 % in net revenue and +6.0 % in external sales, while food sales showed an even accelerated increase during that period of +22.7 % and +18.1 %, respectively. Particularly thanks to the increased share of food sales, the gross profit margin rose by +0.8 percentage points from 43.8 % to 44.6 % in the 2021 financial year.
Valora further pursued its disciplined and flexible cost management across all units while at the same time continuing to support its franchise and agency partners in securing their economic viability. The Group also made use of governmental short-time-working programmes as well as COVID-19 related support funds. However, in a year-on-year view, COVID-19 related support was lower than in 2020 as increased COVID-19 related governmental support funds were compensated by lower COVID-19 related rent concessions. Compared to pre-crisis levels of 2019, 55 % of the gross profit decline was offset by lower costs.
While the Retail division had shown a high resilience throughout the whole COVID-19 pandemic, Food Service demonstrated in the second half of 2021 its ability to translate incremental sales recovery into significant leverage on profitability – even though frequencies were still negatively impacted by COVID-19 related constraints.
Beyond that, Valora realized major steps in line with its foodvenience strategy in 2021, the most notable being the Back-Factory acquisition of Food Service DE and the Moveri partnership of Retail CH, in operation as of January 2022. Both cases provide Valora with access to attractive convenience locations and create significant synergy potential in operations. In addition, the Group continued to increase its customer reach through the further rollout of its autonomous store concepts and by entering into the vending machine business.
After two years of pandemic, Valora is strongly positioned financially and in terms of business. Based on the business performance in the second half of 2021, the Group is confident about the value-creation potential of its foodvenience strategy and continues to invest along all strategic priorities while the incremental capacity from the Group’s CHF 70 million capital increase in November 2020 continues to be available in full for strategic projects.