Good operating result in the first half of 2020
Despite the corona pandemic, the Bell Food Group made operational progress in the first half of 2020 thanks to its broad-based business model and high level of performance. Organic sales growth was 2.9 percent. The operating result at EBIT level rose by 2.4 percent. The Bell Switzerland and Bell International divisions made particular contributions to growth, while the Convenience division suffered from the effects of the pandemic. The Bell Food Group underscores its commitment to sustainability and for the first time publishes a complete sustainability report based on the GRI standard.
The Bell Food Group's sales of goods amounted to CHF 2020 billion in the first half of 2.0 and, adjusted for currency effects and divestments, were CHF 59.3 million or 2.9 percent above the previous year. The loss in sales due to the sale of the sausage business in Germany in 2019 was compensated for.
Due to the several weeks of lockdowns in the countries, sales in the food service sales channel fell sharply for weeks. The restricted mobility also had an impact on the shopping and eating behavior of consumers. The Convenience division, with its to-go ranges and a significant share of sales in the Food Service division, was negatively affected by this.
In its core business with meat and meat products, however, the Bell Food Group recorded a significant increase in the retail sales market, which was able to compensate for the decline in food service. This is particularly true in the home market of Switzerland, where shopping tourism was also interrupted due to the border closings. The strong headwind could also be withstood internationally. Thanks to the focus on raw ham introduced last year and the consistently implemented measures to increase efficiency, the Bell International division was able to make significant progress compared to the previous year, regardless of external factors.
The reported EBIT of CHF 59.4 million is CHF 1.4 million or 2.4 percent above the adjusted prior-year level. The reported half-year result amounts to CHF 34.9 million and is CHF 44.5 million above the previous year's figure, which was burdened by special factors.
Development in the business areas
With sales of CHF 1.0 billion, the Bell Switzerland division was able to increase its sales by CHF 37.7 million (+3.8%) compared to the previous year. The sales volume rose by 1.6 percent to 62.6 million kilograms. Bell Switzerland was able to compensate for the slump in sales in the food service sales channel thanks to significantly higher sales in retail. This business area has therefore proven to be extremely crisis-resistant in the corona pandemic. To strengthen the leadership position in Switzerland, construction work on a new deep-freeze warehouse began in June. A state-of-the-art warehouse will be built in Oensingen by the beginning of 2023, which will enable existing internal and external storage capacities to be concentrated in one location. In addition, the performance is significantly expanded with resource requirements reduced by half.
The Bell International division recorded sales of CHF 481.9 million, an adjusted 8.1 percent above the previous year. The sales volume also grew organically by 2.0 percent to 102.4 million kilograms. The situation with the raw material prices for pork, which rose sharply last year, eased somewhat in the first half of 2020. All three divisions of the business unit contributed to the operational progress. The earnings situation has also improved accordingly. The measures to improve efficiency have led to a significantly better result in the poultry business. The focus on the raw ham segment in the Bell Germany division, which was initiated in the previous year, is also showing good results. Internationally, the focus continues to be on those segments in which the Bell Food Group has intact prospects and has reached a certain critical size. In this context, the international business was further focused with the sale of two production sites in Hungary and France and the sale of the logistics center in Belgium.
Sales in the Convenience division amounted to CHF 515.2 million and, after adjustment, were CHF 19.7 million (-3.6%) below the previous year. The Convenience division was hardest hit by the effects of the corona pandemic. This was particularly noticeable in the food service area and in the to-go ranges in retail. Unlike in the other two business areas, these sales shortfalls could not be compensated to the same extent via the retail channel and a decline in earnings could not be prevented. To strengthen the food service channel, the range will be further expanded with tailor-made product and concept solutions. At the end of June 2020, the Hilcona division entered into a pioneering cooperation with the University Hospital Basel (USB) for the marketing of nutritional solutions for hospitals and nursing homes with the promising MicroPast technology. The USB is a pioneer in this field and also has extensive know-how in nutritionally demanding care catering. In the future, Hilcona will be able to market the menus produced by USB and thus be able to significantly expand its range of services in this growing segment.
Focus on sustainability
The Bell Food Group underscores its commitment to sustainability and for the first time publishes a complete sustainability report in accordance with GRI standards. The Bell Food Group has thus laid the foundation for detailed and transparent sustainability reporting in accordance with the criteria of the Global Reporting Initiative (GRI). The aim of this annual report is to provide more in-depth information about the Bell Food Group's commitment to sustainability.
A good example of sustainability commitment is the BTSplus poultry house, with which Bell Switzerland implemented a pioneering pilot project in 2020 for energy-neutral rearing of broiler chickens according to the Swiss BTS standard (particularly animal-friendly housing systems). The pilot stable produces the required energy from its own renewable sources, does not use any CO2 and causes fewer emissions of dust and odors.
Outlook
The effects of the corona pandemic affected the Bell Food Group in many different areas. Ensuring the health of employees and the effects of the lockdown on the retail and food service sales channels were a major challenge. Through the consistent implementation of protective and hygiene measures at all locations, the health of the employees was protected and the spread of the corona virus in the companies was prevented so far. At the same time, the Bell Food Group was able to maintain delivery readiness at all times.
Due to the uncertain initial situation with regard to the further course of the corona pandemic, the outlook for the second half of the year is challenging. The Bell Food Group assumes that the partial lifting of the corona measures will gradually lead to a further recovery in sales in the food service sales channel. In contrast, sales in the retail sector are likely to return to a level comparable to that before the pandemic. Thanks to its responsiveness and efficiency, the Bell Switzerland division is well equipped for these developments. The positive development in the Bell International division is likely to continue thanks to the focus on high-quality raw ham and sustainable poultry products as well as the implementation of measures to increase efficiency. The Convenience division will recover after the corona measures have been relaxed and will make significant progress in the second half of 2020 thanks to its strategic focus and high level of innovation.
