Cibi e Bevande
Marie Brizard Wine & Spirits: 2021 full-year earnings
Paris, 14 April 2022
2021 full-year earnings
P rofit r ecovery in a highly competitive industry and volatile business environment
coupled with the end of the pandemic
* EBITDA = EBIT – provisions for current assets – depreciation and amortisation – pension liabilities
Marie Brizard Wine & Spirits (Euronext: MBWS) today announces its consolidated earnings for the 2021 financial year as approved by the Group's Board of Directors on 13 April 2022. All audit procedures have been carried out.
Commenting on these results, Andrew
Highcock , Chief Executive Officer of Marie Brizard Wine & Spirits, said :
“The second half of 2021 confirmed the positive trend observed at the beginning of the year; the ongoing operational implementation of our value creation strategy coupled with the achievement of targeted volume growth affirms the
fundamentals of the 2021 EBITDA improvement. Backed by a streamlined financial structure and re stored balance sheet position , the Group intends to pursue profitable and proactive business development while maintaining rigorous cost management at local and central level so as to sustain the profitability of its businesses. In an already highly disruptive and volatile environment at the close of 2021, the Group is particularly vigilant about protecting its interests given the current Ukraine conflict; the Group is committed to maintaining its adaptability as regards its organisation, employees and operations
during the coming months at this time of uncertainty .”
Simplified income statement – FY 2021
In 2021, the Group generated sales of €166.7m (after application of IFRS 5), down 1% compared to the previous year (excluding currency impact), but up 3.6% excluding non-recurring items 1 .
2021 was marked by a recovery in sales driven by the France cluster despite a slowdown in the Off-Trade spirits market, in particular during the second half, in favour of the On-Trade channel.
International business was impacted by multiple and successive changes in health restrictions, particularly in Europe and major Asian markets. Overall business in the USA was encouraging thanks to the new distribution model but fell short of 2020 sales, which were boosted by initial stock building at our new distributor.
The gross margin ratio was 41.1% in 2021, down from 42.4% in 2020 due to:
The various structural measures are bearing fruit and all entities except Dubar in Brazil posted positive EBITDA in 2021.
Net non-recurring operating expenses for 2021 amounted to € -0.1m, mainly due to the positive outcome of the Group's financial restructuring plan.
The €0,25 m net financial income for 2021 was significantly lower than in 2020 (which included one-off proceeds from Trinidad & Tobago recorded in June 2020), but the cost of debt has fallen significantly, given the change in the Group's financial structure following the February 2021 capital increase.
Net earnings from continuing operations in 2021 amounted to a €6,6m profit compared to a net loss of €5.6m in 2020, reflecting the Group's improving profitability and the merits of its strategy of refocusing on the core “brand business”.
2021 net revenues by cluster
2021 EBITDA by cluster
FRANCE CLUSTER
In an industry where competition remained particularly intense, France continued to balance its “value : volume” strategy, posting 2021 revenues of €78.6m, up 3.5% versus 2020.
Following the reopening of hotels, bars and restaurants in the second half and in spite of the COVID Certificate requirement, the out-of-home consumption channel increased by 12% over the last two quarters at the expense of sales among major retailers, which nevertheless grew year-on-year.
The under-12-year blended whisky market recorded a 0.9% decline over the period, significantly impacting William Peel volumes and sales among major retailers against a backdrop of intense promotional activity.
The Group's main brands followed the spirits market trend and confirmed their positive performance in the fourth quarter, driven by leading brands Marie Brizard (Manzanita) and San José. Apart from the slowdown in William Peel volumes, other brands such as Sobieski in the vodka segment gained market share thanks to extensive targeted promotional initiatives.
In 2021, the France cluster also benefited from full-year sales of Paddy Irish whiskey, for which the Group took over distribution in the second half of 2020.
Thanks to tight control of overheads and the recognition of a €3m exceptional non-recurring credit note issued by a whisky supplier under a new contract signed in January 2021, the region's EBITDA increased by 15.9% in 2021 to €12.4m.
INTERNATIONAL CLUSTER
The International cluster posted revenues of €88.1m for 2021, down 4.8% compared to 2020, when revenues were boosted by non-recurring items : excluding these, International cluster revenues were up 3.6% versus 2020. As a reminder, the region's sales are split between the legal entities within the International cluster, as detailed below. The region's business performance, due in particular to the second half recovery of the On-Trade business and improved market coverage, generated EBITDA of €8.6m in 2021, up 2.3% versus 2020.
Revenues amounted to €14.6m, up €4.5m due to (i) business development in Europe, Africa and Asia Pacific, (ii) recovery in the UK and (iii) the inclusion of the Canada and Poland markets served by Imperial Brands and MBWS Polska respectively in 2020.
In Western Europe, as the year progressed, business was significantly impacted by the varying restrictions imposed on different economic operators due to the health crisis.
In Benelux, the “value over volume” policy led to a slight erosion of revenues. These factors were partly offset, mainly during the second half, by the reopening of the On-Trade business in the UK, a major market for the Marie Brizard brand.
Against this backdrop, the Italian market improved in 2021, including towards the end of the year.
The French overseas territories and departments ( DOM-TOM ) witnessed significant growth in business marked by successive changes in health measures similar to those in mainland France. The Africa export markets also performed well, posting strong sales growth throughout the year.
In Poland, sales of our brands (in particular William Peel and Cognac Gautier) to the former MBWS subsidiary (now called Premium Distillers) increased steadily during 2021.
Asia Pacific business in 2021 was driven by overall sales resilience throughout the year in Australia and Korea, which offset the difficulties in Japan (following the state of emergency and lockdown, the Olympic Games not having had as positive an impact as initially anticipated). However, in Australia and Korea, the end of 2021 was, in contrast to the rest of the year, down significantly (destocking effect in Australia) compared to a dynamic 4th quarter 2020.
Revenues amounted to €20.0m, down €1.7m.
Working through the health crisis, Spain was one of the first countries to reopen the On-Trade business, which particularly benefited Marie Brizard brand and cross-border sales. As a result, brand sales rose 2% versus 2020.
This recovery was offset by the Pulco subcontracting business, which saw a year-on-year decline in volumes resulting in an 11% decrease in revenues.
However, growth in brand sales had a positive impact on our margin that outweighed this decline. The subsidiary continued to keep overheads under control, particularly through external cost savings.
Revenues increased by €0.6m to €2.7m, up 25.8% excluding currency impact, thanks to the recovery of the On-Trade market in Denmark as confirmed in the fourth quarter. The Off-Trade market is also subject to growing competition with premium brands available at affordable prices. It is worth noting the positive impact of the takeover of Kidibul brand distribution, which accounted for 25% of revenue growth.
Revenues in the Baltic states were impacted by the sharp contraction of the bulk sales market. In the fourth quarter, following the lifting of health restrictions and expectations of an increase in excise duties at the beginning of 2022, domestic market revenues edged up, boosted towards the end of the year by a stronger recovery than that of the brand business in the Eastern Europe export markets.
Revenues fell €7.2m versus 2020 mainly due to the €5.4m loss in bulk sales. Following restatement, pro forma sales decreased by €1.8m versus the previous year due to lower sales prices in the recurring bulk business, despite the gradual easing of COVID restrictions and price increases for our brands.
Bulgaria also posted strong growth in 2021 for the Group's international spirits brands (Marie Brizard, Sobieski, Gautier, William Peel) coupled with an increase in sales of the main national wine brands, a significant increase in export volumes, particularly to Greece and Turkey, and the subcontracting business to Romania. The subsidiary posted revenues of €14.0m, up €3.9m versus 2020.
In the United States, 2021 revenues fell 8% versus 2020, impacted by the distribution model changes in the first half of 2020.
Revenues thus came in at €10.7m, down €5.4m excluding restatement and currency impact. After restatement, pro forma sales decreased by €3.0m compared to the previous year, with the positive effect of the initial stock building at our distributor evaluated at €2.4m. Changes in the US dollar exchange rate had an adverse impact of €0.4m on the company's revenues.
The end of the year was marked by a slowdown in Sobieski sales due to aggressive promotional strategies pursued by competitors in the vodka category (leading to a decline in value) and postponement of sales to 2022 due to logistical constraints (particularly affecting sea freight). These adverse effects were partly offset by the strong performance from Cognac Gautier.
Brazil experienced strong business growth in 2021, despite the challenging health situation and cancellation of major events, such as the Carnival at the beginning of the year. This momentum was driven by growth in local and imported brand sales (Cutty Sark and Sobieski), although a slowdown was noted in the fourth quarter.
Revenues increased by 40% compared to the previous year, up €3.0m. The depreciation of the Brazilian real hit the region's revenues by €0.3m. Despite the intensification of the new strategy, overall performance was impacted by the year-end slowdown in sales.
HOLDING COMPANY
The holding company posted an EBITDA loss of €8.4m for 2021 compared to an €8.5m loss in 2020, driven by two contrasting trends:
Thus, excluding rebillings, Holding company operating expenses decreased by 16% from 2020 to 2021.
Balance sheet at 31 December 2021
Group shareholders' equity amounted to €173.6m at 31 December 2021 compared to €66.6m at 31 December 2020, as restated , while the net cash position amounted to €48.2m at 31 December 2021, compared to net financial debt of €43.6m at 31 December 2020.
These changes reflect the January 2021 capital increase that led to the capitalisation of (i) all bank debt (excluding factoring) purchased by COFEPP from the Company's lending banks (principal amount of €45m) and overdraft facilities drawn down (principal amount of €1.1m), (ii) all current account advances paid or yet to be paid by COFEPP to the Company and its subsidiary MBWS France (total principal amount of €32m) and (iii) the first tranche of the Poland Advance granted by COFEPP to the Company (€3m) and the related accrued interest.
Outlook
The Group continues to roll out its strategic plan after an initial phase that involved eliminating loss-making operations, cutting costs and streamlining operational structures.
Now organised into two clusters (France and International) under the overall management of the Holding company, the Group is maintaining its consistent objective, both in commercial negotiations and transactions with customers and in brand and market development, of striking the right balance between value and volume, particularly in Europe and the USA.
This strategy, coupled with the policy of tailoring costs to the size of operations on a country-by-country basis, will be continued and will underpin the Group's growing profitability. Bolstered by the proceeds of the February 2021 capital increase, the MBWS Group is now looking to step up organic as well as external growth projects in order to boost operational and financial performance.
2021 full-year earnings confirm the positive trends observed in 2020, in an economic environment largely dependent on developments in the pandemic during H1 2021, with a disruptive impact on the business depending on distribution channels and against a volatile backdrop at the end of the year.
At the beginning of 2022, taking into acount the ongoing resolution of the health crisis and in view of (i) the supply risks relating to the regular unavailability of raw and dry materials, (ii) the sharp increases in costs (which are far higher than the potential for passing them on downstream to the distribution chain and customers), the Group has adopted a conservative position on its annual performance for 2022.
This situation is greatly aggravated by the recent unforeseen news at the end of February about dramatic events in Ukraine (with new exceptional inflationary pressures) and their consequences, which are not yet completely measurable, on all the markets where MBWS operates (particularly in France and Europe); for the time being, the Group is therefore very cautious about its short and medium-term performance in view of these operational challenges, which are forcing the Group to adapt its commercial policies accordingly.
Financial calendar:
About Marie Brizard Wine & Spirits
Marie Brizard Wine & Spirits is a wine and spirits group based in Europe and the United States. Marie Brizard Wine & Spirits stands out for its expertise, a combination of brands with a long tradition and a resolutely innovative spirit. Since the birth of the Maison Marie Brizard in 1755, the Marie Brizard Wine & Spirits Group has developed its brands in a spirit of modernity while respecting their origins. Marie Brizard Wine & Spirits is committed to offering its customers bold and trusted brands full of flavour and experiences. The Group now has a rich portfolio of leading brands in their market segments, including William Peel, Sobieski, Marie Brizard and Cognac Gautier.
Marie Brizard Wine & Spirits is listed on Compartment B of Euronext Paris (FR0000060873 - MBWS) and is part of the EnterNext© PEA-PME 150 index.
APPENDIX FY 2021 Consolidated Financial Statements
Income statement
Balance sheet
Cash flow statement.
1 EBITDA 2020: impact of +3,7m€ arising from the new sales structure in the USA in early 2020 and the impact of bulk sales for hand sanitisers in Lithuania
EBITDA 2021: impact of +3m€ arising from the exceptional, one-off credit note issued by
a Scotch Whisky supplier
2 Restatement of the impact of the new sales structure in the USA in early 2020 and the impact of bulk sales for hand sanitisers in Lithuania.
3 IFRIC/IAS 19: retrospective application of the change in method of calculating pension liabilities
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