Fazer’s resilience to the pandemic combined with profitability improvement efforts resulted in strong financial performance for 2020.
The year 2020 was clearly defined by the global pandemic and related disruptive challenges. All our markets were impacted by the COVID- 19 pandemic. The businesses most severely affected were our retail business, including the Fazer Cafés and the Gateau bakery shops, Fazer Confectionery’s Travel Retail, and the frozen bakery business. On-the-go categories declined as consumers reduced their everyday travelling and commuting. Thanks to several efficiency improvement initiatives and the agility and professionalism of our people, we were able to ensure business continuity, help society and support our customers. Taking the dramatic crisis and downturn into consideration, I am very proud of our performance in 2020. The resilience that our business showed, in combination with our profitability improvement efforts especially in the bakery businesses in Russia and Sweden, resulted in good financial performance for 2020. Our net sales remained stable at the previous year’s level and our profitability improved.
The sale of Fazer Food Services at the beginning of the year marked the beginning of our journey towards an integrated FMCG company. In 2020, several measures were taken to drive operational excellence, synergies and value. We started the implementation of a new operating model including changes in the commercial organisation, in marketing and in procurement, as well as reorganising Group functions. In addition, actions to increase efficiency in manufacturing included the decision to transfer the production of xylitol pastilles and chewing gum from the factory in Karkkila to Lappeenranta and the production of Fazer Yosa oat products from Kaarina to Koria in Finland.
We also continued to execute our growth strategy in accordance with our updated vision Towards Perfect Days. During the year, Fazer Bakery and Fazer Confectionery continued strengthening their market positions, especially in Finland, but also in other home markets. Fazer Bakery’s turnaround projects in Russia and Sweden progressed with good results, supporting the good financial development of the Group.
The turnaround work continues both in Sweden and Russia, and on February 2021, we announced the introduction of a new operating model in Fazer Bakery Sweden. The new model includes a re-seller and co-distribution agreement with the Swedish bakery sales company Polfärskt and reduces the number of our bakeries from four to three. The new distribution model will increase our agility and service levels for customers while, at the same time, being environmentally more sustainable.
Our ambition is to become one of the leading plant-based players in Northern Europe by continuously identifying new categories and growing current ones. By investing in innovations and foodtech, Fazer strengthens its focus on the sustainable food solutions of the future.
In 2020, the construction of Fazer’s xylitol factory continued. The factory is unique. It utilises oat hulls that are generated as side stream of the oat milling process, to produce xylitol with state-of-the-art technology. We are extremely proud of the fact that the factory, applying the principles of circular economy and Fazer’s strategic focus on innovations, has been recognised by the Finnish Food and Drink Industries’ Federation, who awarded the factory the Star Act 2020 in November 2020. The factory will be inaugurated in 2021.
During the year, Fazer increased its shareholding in Solar Foods and became the company’s largest shareholder, with a 15% ownership stake. Solar Foods is a Finnish foodtech start-up, which has developed a novel protein ingredient, Solein®, from CO2.
To meet the growing demand for oats and to provide top-quality ingredients for our businesses, we are doubling our oat milling capacity in Lahti, Finland and Lidköping, Sweden in 2021. Oats will continue to be at the core of the Fazer Lifestyle Foods’ business and an important ingredient in especially the bakery business. The use of oats in various categories will develop. A great example of a true innovation that responds to the needs of the consumers is the Fazer Oat Rice, which was launched in all Nordic countries in 2020. The novelty innovation was awarded the Swedish Food Award Livsmedelspriset 2020. Strong focus will remain on the non-dairy, plant-based meals and breakfast categories.
Systematic R&D work contributes to a wide portfolio of innovations to further build on. Selected acquisitions play a key role in the realisation of the growth plan.
Fazer, celebrating its 130th anniversary this year, is financially strong and has a clear strategy for the future. We have high growth ambitions going forward, which could also open up for a potential broadening of the shareholder base through a public listing at some point in the future. In the coming years, we are seeking growth both organically and through various smaller and bigger transformational M&A opportunities. We will continue focusing on our four strategic growth areas: leveraging the leading FMCG brand to strengthen our position in Finland, accelerating growth through innovations, on-trend categories and foodtech, developing leading positions in Northern Europe as well as driving operational excellence and enabling industry leading profitability. Sustainability is an integral part of our strategy, and we will continue developing the sustainable food solutions of the future to benefit people and the planet.
Our success in 2020 and the progress in executing our strategy would not have been possible without the strength, passion and determination of all our great people. Together, we will continue building on the four cornerstones of our strategy, developing our culture to further support our transformation journey and work decisively towards realising our commitment to the Science Based Targets Initiative, which will guide our work in reducing the greenhouse gas emissions. We expect Fazer’s net sales to improve in 2021 compared to the previous year, assuming that the development of the COVID-19 pandemic and the general economic climate will not deteriorate. We will monitor the situation closely and act with similar decisiveness and agility as in 2020.
Last, but by no means least, I would like to thank all our customers, partners and stakeholders for their engagement and support in 2020.
President & CEO