Business environment

The economic environment in those regions of relevance for the Group was once again affected by the coronavirus pandemic in the past year. Although there was a clear recovery in the global economy compared with the previous year, supply bottlenecks and sharp price increases for raw materials and components, as well as for transport and logistics, had a negative impact on global supply chains. The resulting global inflationary pressure led to the highest inflation rates seen by major economies, such as North America (+4.7% in 2021) and Germany (+3.1% in 2021), for almost three decades. Nevertheless, overall economic growth in the European Union was extremely positive with an increase in gross domestic product (GDP) of 5.2% in 2021. There was similarly robust GDP growth of 5.6% in the USA. Government stimulus programs, such as the American Rescue Plan adopted in spring 2021 with a volume of USD 1.9 trillion, had a positive impact on economic development. After declining by 3.9% in 2020, GDP in Brazil grew by 4.6% in 2021 – albeit accompanied by high inflation and unemployment rates. Despite rising uncertainties, particularly in the real estate market, the Chinese economy grew by around 8.1% in 2021.

The global coffee market was also dominated by the aforementioned price developments on the commodity markets in 2021. Due in part to extreme weather conditions in the growing regions, average green bean prices rose by more than 75% over the course of 2021. Sales volumes in the German coffee market rose by 1.6%, driven primarily by the whole bean segment (+13.3%). The Brazilian coffee market reported a decline in volume of 7.1% in 2021. The US roasted coffee market also experienced a downturn in volume of 8.4%.

Development of business

Despite this challenging environment, the Melitta Group performed well on the whole and achieved further revenue growth. However, the challenging procurement situation and the fact that price increases could only be passed on to retailers with a certain time delay in many cases had a negative impact on potential earnings growth.

Due to the fact that many people continued to spend more time than average at home in 2021, the pandemic had a positive effect on the Group’s end-consumer business. At the same time, however, it resulted in further losses in the out-of-home, food service, and catering sectors. With the easing of Corona restrictions in the second quarter, these two trends began moving in opposite directions as the situation reverted to normal. Thanks to the strict implementation of hygiene and protection measures by our employees, production in all areas of the company remained stable throughout the year. There were only minor disruptions caused by a partial shortage of input materials.

A) Coffee and tea

Total sales volumes in the Melitta Group’s Coffee business field amounted to 190 thousand metric tons in 2021, up 9.2% on the prior-year figure (174 thousand metric tons). The Group’s share of the German coffee market was expanded to 11.3% (previous year: 9.5%). This growth was driven above all by products in the filter coffee and whole bean segments. Despite adverse economic conditions, high unemployment, and inflation, there was volume growth of 3.8% in South America. The Melitta Group also succeeded in expanding its share of the South American market. In view of our many years of uninterrupted growth in the Brazilian coffee market, we reviewed our production facilities in 2021 and realigned them for the future. As a result, the coffee roasting plant in Bom Jesus, Brazil, was relocated to the new Varghina production site in the Minas Gerais region. This decision allows us to benefit from the proximity to our main coffee suppliers in the regions of Belo Horizonte, Rio de Janeiro and São Paulo. Minas Gerais is also one of the main coffee growing regions in Brazil. The Café Bom Jesus^® brand will, however, be retained. In the USA, we were able to significantly expand our B2B volume by winning new orders.

In 2021, we continued to expand our dealer network and implemented innovative marketing channels for the distribution of products under the premium tea brand Avoury^®. Due to Coronarelated marketing restrictions, sales revenues have not yet reached the expected level.

Our sports sponsorship activities – via partnerships with Manchester United, Borussia Dortmund, and Arminia Bielefeld – once again helped to strengthen Melitta’s brand presence in 2021.

In 2021, the Group increased its stake in Roast Market GmbH. Roast Market is one of Europe’s fastest-growing online coffee retailers. The Melitta Group increased its stake from 25.5% to 72.0%. Co-shareholder is TEC The Enabling Company GmbH (28%), a member of the Burda Group.

With the acquisition of a 70% stake in Caffè Corsini, Italy, the Group continued its internationalization strategy in the European coffee business and gained access to the Italian retail and food service business. Caffè Corsini is a traditional family business with its own premium brands.

B) Coffee preparation

While sales volumes of filter papers were unable to consolidate their successful prior-year level, sales of filter coffee machines were up slightly on the previous year. Thanks to increased home consumption, the market for fully automatic coffee machines for private households also continued to grow in 2021, contributing to the positive development with volume growth of 23%.

The easing of Coronarelated restrictions over the course of 2021 helped revive business in the professional hot beverage sector to a certain extent. In some cases, however, it was still necessary to resort to short-time working. At the same time, we were able to implement the revamped branding and thus support the rise in business activity. Although the propensity to invest is still generally low, revenues were boosted by a number of major international orders. Moreover, the new companies established in Canada and Poland are expected to boost the Group’s international expansion. In the Office Coffee Solutions (OCS) segment, the branding was also revised and a new website developed.

C) Household products

We are pleased to report that the market shares achieved in 2020 were maintained or expanded in all product groups for private households. The food service business performed well compared to the previous year. Earnings in all segments were impacted by significant increases in the price of plastics and aluminum on the commodities markets. One example of these price hikes is the development of the Plastixx price index for plastics. As of December 2021, the index was around 63% higher than in the previous year. Countermeasures such as price negotiations and cost reductions helped to partially offset the negative impact on our contribution margins. We aim to continue the ongoing development of ecologically compatible products by pursuing the sustainability initiative launched in previous years. Our target is the exclusive use of recycled or renewable raw materials for products and packaging by 2025. Starting in 2021, most products under the Toppits^® brand are now produced using 35% recycled resources.

The Cuki Group, in which we acquired a majority stake in 2018, continued to make good progress in 2021 with the successful expansion of its core portfolio of aluminum products, especially for the B2B segment. As part of its ongoing integration into the Melitta Group, further progress was achieved on a number of projects. The investment in Cuki Alfatec in Poland was sold in the fourth quarter of 2021.

In the dust filter bag segment, B2B sales volumes remained stable year on year, while there was a slight decline in B2C volumes.

D) Other business

The wallpaper industry continued to suffer from falling demand in 2021. In order to reduce dependence on this client sector, work on the development of product solutions for other sectors continued. Unfortunately, however, the business operations of Neukölln Spezialpapier had to be discontinued in mid-2021 following a careful review. The numerous measures taken in recent years failed to achieve any sustainable success and there were no signs of improvement even in the medium to long term in this highly competitive market.

Earnings position

In its fiscal year 2021, the Melitta Group generated total sales of € 1,882 million. Compared to the previous year (€ 1,733 million), this represents nominal growth of 8.6%. Adjusted for currency differences, revenues rose by around 11%. In view of the ongoing uncertainty surrounding the impact of the coronavirus pandemic at the beginning of 2021, expectations of slight revenue growth were more than matched.

The performance of our individual operating divisions illustrates that we were able to expand our business fields by gaining market share and increasing sales volumes. However, increased costs for the procurement of materials and logistics services placed a noticeable burden on earnings, which was partially offset by the implementation of countermeasures. Against this backdrop, we are generally satisfied with the overall development of the Melitta Group in the reporting period. Significant investments were made in particular in our machinery and in the M&A transactions described above.

The following table shows a breakdown of consolidated net sales:

Due in particular to volume growth and price increases, sales of the business field Coffee were 21.3% up on the previous year.

Sales revenues in the Household Products business field were around 3.5% above their prior-year level. In addition to branded products, this is primarily attributable to the food service division and the positive development of the Cuki Group.

Revenues of the Coffee Preparation business field were up 2.6% year on year, mainly as a result of increased sales of filter coffeemakers and fully automatic coffee machines. As expected, the recovery in sales of professional hot beverage preparation products in the system and non-system catering segments due to the easing of coronavirus restrictions will not be noticeable until the following year.

Assets and finance

A) Asset and capital structure

As of December 31, 2021, the Melitta Group’s equity capital stood at € 307 million. The year-on-year increase of € 20 million resulted from the net balance of the consolidated net profit, foreign currency changes without effect on income, shareholder contributions and withdrawals, as well as changes in the consolidated group.

The equity ratio amounts to 26%. Bank balances, long- and shortterm securities and cash equivalents contained in other assets were deducted from the balance sheet total when calculating the equity ratio.

Net bank borrowing of the Melitta Group as of December 31, 2021 amounted to € 236 million (prior year: € 176 million) and comprises bank liabilities and liquid funds; including other interest-bearing net financial liabilities, net financial debt totaled € 243 million (prior year: € 189 million). The main reason for the increase in debt is the development of working capital requirements in our business fields.

Bank liabilities rose by € 37 million, from € 342 million to € 379 million. In April 2021, we prematurely and bilaterally refinanced part of a tranche of promissory notes maturing in 2022 with 5- and 7-year maturities.

Pension accruals and similar obligations rose from € 174 million to € 178 million. Other accruals, including tax accruals, decreased by € 1 million to € 160 million. This was mainly visible in the sales accruals. Timely settlements helped avoid the need to form accruals in 2021.

As a result of price increases, the Melitta Group’s trade payables rose year on year by € 57 million as of December 31, 2021. Other liabilities declined by € 6 million to € 65 million.

The Group’s total assets increased by € 114 million, from € 1,211 million to € 1,325 million.

As of the reporting date, there was a net increase in non-current assets of € 31 million. The total net rise in financial assets of € 34 million was mainly due to the purchase of shares in Roast Market and Caffè Corsini. The Melitta Group’s investment of € 50 million in intangible and tangible assets focused mainly on machinery and software. There was an opposing effect from depreciation and amortization of around € 51 million, as well as from other changes.

Current assets increased by € 84 million, from € 794 million to € 878 million. The rise was primarily attributable to increased inventories caused by general commodity price hikes and higher levels of goods to avoid supply bottlenecks.

B) Liquidity

The liquidity of the Melitta Group is analyzed via the cash flow statement. The Group generated positive cash flow from operating activities in 2021. There was a cash outflow from investing activities. Financing activities mainly comprise withdrawals made by the owners and the net new assumption of bank liabilities.

In fiscal year 2021, the Melitta Group continued to have sufficient credit lines to finance its working capital.