In the past year, the economic environment in those markets of relevance for the Group was significantly impacted by ongoing supply chain issues and exceptionally high inflation rates, partly as a result of the Russia-Ukraine war. In order to counter this rising inflation, central banks around the world raised interest rates.
Due to its geographical proximity and dependence on gas supplies, the impact on the EU region was particularly strong. In Germany, inflation averaged 7.9% in 2022 (3.1% in 2021) and reached its highest level since reunification during the year.
Although GDP also grew by 1.9% in 2022, raw material and energy price hikes coupled with higher interest rates led to a noticeable deterioration in business and consumer confidence over the course of the year. The trend was similar in Italy with inflation of 8.7% and GDP growth of 3.9%, and in France with inflation of 5.9% and GDP growth of 2.6% in 2022. In the UK, growth reached 4.0%, while consumer prices rose by 7.9%. In the USA, inflation averaged 6.5% in 2022, while the economy grew by 2.1% – due in part to a favorable labor market trend.
Growth in Brazil amounted to 2.9%, although consumer purchasing power was weakened by inflation and higher interest rates. Economic growth of 3.0% in China was well below the prior year (8.4%) in 2022, mainly due to the slump in the real estate sector, ongoing coronavirus restrictions and a decline in exports.
Development of business
Despite this challenging environment, the Melitta Group performed well on the whole and achieved further revenue growth in 2022. However, this growth was largely attributable to price increases necessitated by developments in the commodity, logistics, and energy markets. Sales were also boosted by the first-time inclusion of the companies Caffé Corsini and Roast Market in the consolidated financial statements.
A) Coffee and tea
Sales volumes in the Melitta Group’s Coffee business field amounted to 167 thousand metric tons in 2022 and were thus 12% down on the prior-year figure (190 thousand metric tons). The Group’s share of the German coffee market was almost unchanged at 11% (previous year: 11.3%). In view of the adverse procurement market environment and the possibility of gas shortages, inventories of green beans and finished goods had to be increased to above-average levels during the course of 2022 in order to ensure continued supply capability. The main volume shortfalls in the North and South America regions, where weakened purchasing power led consumers to focus more on low-priced competitive products, were primarily the result of pricing measures taken by the respective companies to protect relative gross profit margins.
The distribution of products under the premium tea brand Avoury® was further boosted by the expansion of its dealer network and the implementation of innovative marketing channels in 2022. The same applies to Roast Market, which enjoyed continued volume growth.
B) Coffee preparation
Compared to the previous year, there was a noticeable increase in the level of services rendered in the professional coffee machine segment in 2022 – due in part to the revival of customer demand following the coronavirus pandemic.
As a result of price measures taken to protect relative gross profit margins, there was a moderate 6% decline in sales volumes of filter papers.
Since demand for filter coffeemakers and fully automatic coffee machines returned to normal levels following the exceptionally positive trend of the previous years – partly as a result of the coronavirus pandemic – sales volumes declined by 36% and 20%, respectively. The situation was exacerbated by the deterioration of consumer sentiment and price measures initiated to safeguard gross profit margins.
C) Household products
In view of the extraordinarily positive effects of the coronavirus pandemic in the preceding years, overall customer demand and thus total volumes in the relevant markets fell short of the prior-year levels. This also applies to the Melitta Group’s respective product groups in this business field.
Earnings in all segments were impacted by significant price increases for plastics and aluminum on the commodities markets. This price development was reflected, for example, by the Plastixx price index for plastics. Countermeasures such as price negotiations and cost reductions could only partially offset the negative impact on contribution margins.
Despite the challenging conditions, the path already taken toward the complete circularity of household products and packaging will continue to be pursued. The aim is still to use only recycled, recyclable or renewable raw materials for products and packaging by 2025. At the end of 2022, half of Cofresco’s products were already made from waste or residual materials. The largest contribution was made by food films and bags with 70% recycled resources and bin liners made from 80% recycled plastic.
The Cuki Group, in which the Melitta Group acquired a majority stake in 2018, continued to make good progress in 2022. In its core business of aluminum, the Cuki Group was able to further expand its market shares despite an overall market decline.
In the dust filter bag segment, sales volumes were down year on year, due in part to ongoing contract negotiations with business customers.
D) Other business
Sales volumes of flexible packaging for the consumer goods industry were up on the previous year. The energy-intensive wallpaper industry continued to be affected by the overall economic situation in 2022.
In its fiscal year 2022, the Melitta Group generated total sales of € 2,284 million. Compared to the previous year € 1,882 million, this represents nominal growth of 21%. Adjusted for currency differences, revenues rose by around 18%. In view of the ongoing uncertainty surrounding the impact of the coronavirus pandemic at the beginning of 2022, as well as the downbeat consumer and business sentiment with high inflation rates caused in part by the Russia-Ukraine war, expectations with regard to sales revenue were fulfilled.
The performance of the individual operating divisions shows that revenues of the business fields were raised in part by market share gains, but above all by necessary price increases. At the same time, strong hikes in material, energy, and transport costs placed a noticeable burden on earnings. Against this backdrop, the overall development of the Melitta Group in the reporting period can be described as satisfactory. Significant investments were made in particular in property, plant and equipment, as well as in future-oriented projects.
The following table shows a breakdown of consolidated net sales:
in € thous.
Due in particular to price increases, sales of the business field Coffee were 49.7% up on the previous year.
Sales revenues in the Household Products business field were around 3.4% above their prior-year level. This growth is primarily attributable to the food service division and the Cuki Group.
Revenues of the Coffee Preparation business field were up 5.9% year on year. As expected, the recovery in sales of professional hot beverage preparation products in the system and non-system catering segments following the easing of coronavirus restrictions had a positive impact. In addition, volume losses were partially offset by price increases for filter papers, filter coffeemakers, and fully automatic coffee machines.
Assets and finance
A) Asset and capital structure
As of December 31, 2022, the Melitta Group’s equity capital stood at € 324 million. The year-on-year increase of € 17 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, 2022 amounted to € 243 million (prior year: € 236 million) and comprises bank liabilities and liquid funds. Including other interest-bearing net financial liabilities, net financial debt totaled € 255 million (prior year: € 243 million).
In order to manage liquidity and optimize working capital, a portion of trade receivables was sold under an ABCP (asset backed commercial paper) program.
Bank liabilities decreased by € 18 million from € 379 million to € 361 million.
Pension accruals and similar obligations declined from € 178 million to € 176 million. Other accruals, including tax accruals, decreased by € 11 million to € 149 million. As a result of lower earnings, tax and personnel accruals in particular were down on the previous year.
Due in part to price increases, the Melitta Group’s trade payables rose year on year by € 27 million as of December 31, 2022. Compared to the previous year, other liabilities were € 24 million higher. This was primarily attributable to increased tax liabilities, as well as liabilities in connection with the ABCP program.
The Group’s total assets increased by € 39 million from € 1,325 million to € 1,364 million.
Non-current assets were on a par with the previous year. The total net decrease in financial assets of € 43 million was mainly due to the first-time consolidation of Roast Market GmbH and Corsino Corsini S.r.L. 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 € 54 million, as well as from other changes.
Current assets increased by € 39 million, from € 878 million to € 917 million. This rise was mainly due to inventories, which increased as a result of general commodity price hikes and higher levels of goods to avoid supply bottlenecks.
The liquidity of the Melitta Group is analyzed via the cash flow statement. The Group generated positive cash flow from operating activities in 2022. There was a cash outflow from investing activities. Financing activities mainly comprise the reduction of financial liabilities, withdrawals made by the owners, and interest payments.
In fiscal year 2022, the Melitta Group continued to have sufficient credit lines to finance its working capital.