Business environment

As in the previous year, the economic environment in some of the markets of relevance for the Group was shaped by the impact of geopolitical crises, the rising cost of living, and a persistently gloomy consumer and business climate in 2023. In order to counter high inflation rates around the world, central banks once again raised interest rates in 2023.

Above all in Europe, the economic recovery was dampened in particular by reduced consumer confidence, persistently high energy costs and high interest rates. In Germany, inflation averaged 5.9% in 2023, while GDP fell year on year by 0.3%. This decline was primarily attributable to the lower level of consumer spending resulting from diminished purchasing power and increased uncertainty caused by geopolitical conflicts. There was a similarly subdued development in Italy with inflation of 6.1% and GDP growth of just 0.7% in 2023, as well as in France with virtually unchanged inflation of 5.8% and GDP growth of 1.0%. In the UK, growth was just 0.5%, while consumer prices rose by 4.2%.

In the USA, inflation decreased significantly and averaged 3.4% for 2023 as a whole. At the same time, higher consumer spending helped the economy grow by 2.5% – and thus more strongly than in the previous year. Growth in Brazil amounted to 3.1% and was thus also up on the previous year, despite the negative impact of geopolitical crises and lower exports. At 5.2%, Chinese economic growth in 2023 was also more robust than in the previous year (3.0%), albeit still below expectations due to the ongoing crisis in the real estate sector and emerging structural weaknesses.

Development of inflation in the euro area

in %

GDP development

in %

Development of business

On the whole, the Melitta Group performed well in this persistently challenging environment. Our main focus in 2023 was to secure the quality of our contribution margins. To this end, we also made a conscious decision to accept lower sales volumes. In addition, prolonged negotiations with retailers and the associated interruptions to deliveries had a negative impact in certain business fields. In total, sales revenues were 6% below the prior-year level.

a) Coffee and tea

Sales volumes in the Melitta Group’s Coffee and Tea business field amounted to 166 thousand metric tons in 2023 and were thus on a par with the previous year (167 thousand metric tons). At 12.5%, the Group’s share of the German coffee market was higher than in the previous year (11.0%), despite the decline in sales volumes. Following significant volume shortfalls in the previous year in the North and South America regions, where weakened purchasing power led to consumers focusing more on low-priced competing products, sales volumes in South America rose by 16.7% in the fiscal year 2023.

Due to falling commodity prices and targeted working capital management, inventories of green beans and finished goods were reduced over the course of 2023.

Our premium tea brand Avoury^® was able to expand its sales volumes of tea machines and tea capsules in the fiscal year 2023, due in particular to strategic measures implemented in the field of sales and marketing. Although the market environment in 2023 was extremely challenging for its business model, Roast Market performed well and succeeded in maintaining its prior-year level.

b) Coffee preparation

Due in part to the development of the international market environment, there was a further noticeable year-on-year increase in deliveries in the professional coffee machine segment in 2023. This applies in particular to the regions outside Europe, where new orders for commercial coffee machines were successfully concluded. Good progress was made for example in North America and Asia, and especially China.

In the filter paper segment, there was an overall decline in sales volumes of 13% due to delivery interruptions during the year as a result of the aforementioned price negotiations with European retail organizations. However, volumes were up in the South American market.

Following exceptionally strong sales of filter coffeemakers and fully automatic coffee machines in 2020 and 2021 – partly as a result of the coronavirus pandemic – and the subsequent decline in 2022, sales volumes continued to fall in 2023 due to further normalization and subdued consumer spending.

c) Household products

Compared to 2022, overall customer demand and thus total volumes in the relevant markets fell once again in 2023. This also applies to the Melitta Group’s respective product groups in this business field. In addition, the aforementioned price negotiations and unplaced orders from major retailers negatively impacted sales in various European markets during the year.

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. One successful redesign in terms of material composition is our eco bin liners, which are now made from 95% recycled materials and thus contribute to a more sustainable circular economy.

Sales of dust filter bags were down on the previous year due to interrupted deliveries during the year as a result of the aforementioned price negotiations with retailers and the loss of a major business client.

d) Other business

In the field of film packaging for the consumer goods industry, sales of sustainable and recyclable N-Viron-Flex^® film laminates made good progress. The wallpaper industry continued to suffer from high commodity prices and weak demand, particularly in Eastern European markets, in 2023.

Earnings position

In its fiscal year 2023, the Melitta Group generated total sales of €2,149 million. Compared to the previous year (€2,284 million), this represents a nominal decline of 6%. Adjusted for currency differences, the revenue shortfall amounted to 5%. In view of the ongoing uncertainty surrounding the impact of various geopolitical crises, as well as downbeat consumer and business sentiment in view of persistently high inflation rates, expectations with regard to sales revenue could not be fully achieved.

The performance of the individual operating divisions shows that revenues of the business fields were mostly down due to reduced sales volumes. At the same time, a fall in the cost of materials, above all, resulted in improved contribution margins. Against this backdrop, the overall development of the Melitta Group in the reporting period can be described as satisfactory.

The following table shows a breakdown of consolidated net sales:

Due in particular to price reductions as a result of lower green bean prices, total revenues of the business field Coffee were 7.2% down on the previous year. By contrast, revenues in Brazil increased in 2023 and B2B sales on the North American market also made good progress.

Sales revenues in the Household Products business field were 7.6% below the prior-year level. In this segment, there was a year-on-year improvement in sales of the Cofresco Professional business unit, while sales of the Cuki Group’s Food Management unit remained stable.

Revenues of the Coffee Preparation business field were down 0.7% year on year. As in the previous year, the post-pandemic recovery in sales of professional hot beverage preparation products in the system and non-system catering segments had a positive impact. In addition, the price increases in the filter paper segment needed to secure contribution margins also played a key role in partially offsetting sales volume shortfalls.

Assets and finance

a) Asset and capital structure

As of December 31, 2023, the Melitta Group’s equity capital stood at €332 million. The year-on-year increase of €8 million resulted from the net balance of the consolidated net profit and foreign currency changes without effect on income, as well as shareholder contributions and withdrawals.

The equity ratio amounts to 28%. Bank balances 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, 2023 amounted to €157 million (prior year: €243 million) and comprises bank liabilities and liquid funds. Including other interest-bearing net financial liabilities, net financial debt totaled €180 million (prior year: €255 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. Moreover, a supply chain finance program was utilized for trade payables.

In the course of refinancing in 2023, bank liabilities were reduced by €79 million from €361 million to €282 million.

Pension accruals and similar obligations declined from €176 million to €170 million. Other accruals, including tax accruals, increased by €6 million to €155 million.

The Melitta Group’s trade payables fell year on year by €31 million as of December 31, 2023. Compared to the previous year, other liabilities were €35 million higher. This is primarily attributable to liabilities from the aforementioned use of liquidity management and working capital optimization programs as well as liabilities in connection with an increased stake in the Cuki Group and Coffee at Work.

The Group’s total assets decreased by €66 million from €1,364 million to €1,298 million.

Non-current assets were on a par with the previous year. The Melitta Group’s investment of €55 million in intangible and tangible assets focused mainly on machinery, software, and the increased stake in the Cuki Group and Coffee at Work. There was an opposing effect from depreciation and amortization of around €56 million, as well as from other changes.

Current assets decreased by €62 million, from €917 million to €855 million. This reduction was mainly due to inventories, which fell as a result of general commodity price decreases and working capital management.

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 2023. 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 2023, the Melitta Group continued to have sufficient credit lines to finance its working capital.