Press release
27. April 2005
Lekkerland is growing in Europe
Sales and result increased / European expansion results in a firm foothold in up-and-coming markets
LEKKERLAND-TOBACCOLAND GmbH & Co. KG (L-T) was able to increase markedly its group sales in the 2004 business year by increasing its shareholding in LEKKERLAND Europe Holding by 49.2 percent to 8,351 million euros. “For many years, Lekkerland has been a success story, and we have continued it into 2004. The LEKKERLAND Europe Holding takeover means that we have put everything in place for effectively dealing with the European market”, said Christian Berner, Chief Executive Officer Lekkerland, as he submitted the 2004 balance sheet. “Our acquisitions in western Europe mean that we have been able to develop our well-established markets, while our purchases in eastern Europe have resulted in our getting a firm foothold in their up-and-coming markets.” For the first time, subsidiary companies have been consolidated in the annual financial statement in the Netherlands, Belgium, Spain, the Czech Republic, Slovakia and Switzerland. Comparison with the balance sheet figures of the previous year is thus possible only to a limited extent.
Net income was 81.6 million euros, 16.6 percent above the previous year’s result of 69.9 million euros. The EBIT (earnings before interest and tax) rose by 25.7 million euros to 108.1 million euros, corresponding to a growth of 31 percent in comparison with the previous year. In addition to the acquisitions which have been made, this may also be essentially attributed to specific measures in logistics which have markedly reduced expenditures.
The further enormous increase in tobacco tax in several coun-tries and smoking bans in a number of states for certain loca-tions and premises have necessarily led to downturns in sales of branded cigarettes. An increase in smuggling as well as legal tourism in tobacco goods have resulted in great shifts in the market in places. In spite of the negative effects due to public policy, tobacco goods continue to represent the company’s largest goods sector, accounting for 6,474 million euros of sales. Sales in this sector increased by 53 percent in compari-son with previous year.
Sales in the foodstuffs sector underwent a very positive devel-opment. The rainy summer in Germany and Benelux in com-parison with the previous year brought about downturns in sales in the drinks area. In addition, the special regulations for deposits on disposable containers in Germany, which are unique in Europe, led to shifts in the market away from dispos-able containers to reusable containers. The food/non-food area recorded sales totalling 1,854 million euros, a rise of 38 percent.
The telecommunications market is continuing an overall posi-tive development throughout Europe. The telecommunications and miscellaneous sector achieved sales of 205 million euros, increasing sales by 14 percent in comparison with the previous year. In accordance with a directive of the Minister of Finance, the sales in this sector include for the first time only earnings from commissions instead of the gross nominal values of the prepaid telephone cards.
National companies brought together by region
The annual financial statement brings together the sales of the companies which were taken over to 1 January 2004 in the Netherlands and Belgium in the Benelux region. Other coun-tries include Spain, the Czech Republic, Slovakia as well as Switzerland, which, however, was not fully integrated until its shareholding was increased to 1 July. Sales in Hungary are not consolidated, since the shareholding was not increased to 100 percent until 26 October. Germany, which accounts for 64 percent of total sales, is disclosed individually. The Benelux region contributes 31 percent. Other countries account for 5 percent of sales.
Telecommunications in Germany continue their upward trend / downturn in total sales
Unfavourable public policies as well as the generally poor eco-nomic situation had a negative effect on sales in Germany. Earnings were slightly lower than those of the previous year.
The deposit on disposable drinks containers as well as the tax on so-called alcopops particularly affected the result in the food/non-food area. Although Lekkerland further extended its successful return system for disposable drinks containers, the P system, this area of goods had to take a reduction in sales of 68 million euros. Alcopops recorded a downturn in sales of 43 percent in comparison with the previous year. Sales in the food/non-food sector consequently fell from 1,354 million euros to 1,241 million euros.
The rate of tobacco tax was increased twice, and although this had an effect on sales of branded cigarettes, external sales in the area of tobacco goods at Lekkerland remained stable in spite of the difficult market conditions. The disclosed downturn of 5 percent is largely to be attributed to a reduction in sales which do not affect the result on the part of the partner company tobaccoland Automaten. The development of sales of tobacco goods at Lekkerland is markedly better overall than that of the market.
The area of telecommunications continued its gratifyingly positive development of the last few years. Telephone credit commissions and miscellaneous rose by 4 million euros. The doubling of the share of electronic loading, so-called e-loading, from 32 to 62 percent of telecommunications sales, is particu-larly pleasing. There were 16,000 installed terminals at the end of the year.
Benelux maintains its market position
In the Benelux region, the company was able to increase sales by 15.3 percent to 2,681 million euros in spite of weak domes-tic demand. The tobacco goods range accounted for 87 percent of sales. Sales increased here by 17.3 percent to 2,337 million euros. This growth may be attributed to a takeover to mid-2003. In spite of the rainy summer and the low level of consumer confidence, the food/non-food area accounted for sales of 326 million euros, 1.1 percent more than in the previous year.
New customer acquisitions resulted in company sales of 18 million euros in the telecommunications sector. This corre-sponds to a growth in sales of 70 percent.
Positive sales in southern and eastern Europe
Consolidated sales for the other countries were 406 million euros and are based on marked growth in all countries. Spain thus recorded growth in sales of 12 percent to 198 million euros, and the Czech Republic an increase of 4.5 percent to 100 million euros. The filling station and system customer groups of customers made marked gains in both countries, Spain with 22 percent and the Czech Republic with 33 percent. The electronic loading of telephone credits has also got off to a good start in Spain and Switzerland.
Prospects for 2005: European growth strategy
The economic prospects for 2005 look good for Lekkerland. Christian Berner says: “Although we assume that there will again be a difficult economic situation in Germany especially, there are opportunities for growth in other sectors and countries, in particular in the east of Europe.” The company assumes sales growth in the single-digit percentage range.
The objective is to expand further the Lekkerland business model with its innovative power, flexibility and distribution strength in the convenience area. The range, services, delivery standards and tried and tested business models are being further standardized throughout the countries in terms of the “best out of all”. It is intended that expansion be carried into other European countries.
Lekkerland’s clear twin-track customer orientation will also make its contribution toward further growth. Firstly, because the company adapts to the requirements and demands of its internationally oriented business partners, for which Lekkerland, in its capacity as a convenience wholesaler, makes its services and standards available throughout Europe. Secondly, Lekkerland is continuing to focus on the many thousand regionally operating customers in all countries, for which Lekkerland sets store in its proven fundamental idea that “all busi-ness is local”, placing its trust in the expertise which has often developed there over decades.
New brand for the European convenience trade
The external symbol of the company’s new global orientation is the development of an internationally powerful brand which brings together the national organizations as of now. To date, the individual companies have been presenting themselves in different countries under various names and logos. The name Lekkerland operates as an umbrella brand in connection with the new red logo. The name Conway will be used in future for the companies in countries in which the company cannot use the name Lekkerland, for example, currently in Belgium and Spain. “Our new corporate identity means that we will make Lekkerland the brand in the international convenience trade,” is Christian Berner’s forecast.
Short sketch of Lekkerland
Lekkerland supplies 116,000 filling station shops, kiosks, convenience stores, fast-food chains, specialist tobacco goods stores, specialist drinks markets, department stores, foodstuffs markets, bakeries and canteens with a full range of sweets, drinks, snacks, convenience ranges, ice cream, deep-frozen food, fresh products, tobacco goods, telephone cards and non-food in nine European countries. The company achieved sales of 8,351 million euros in 2004 and employs 6,500 persons.
Contact
Inga Koenen
LEKKERLAND-TOBACCOLAND GmbH & Co. KG
Europaallee 57
50226 Frechen
Tel.: +49 2234/1821-291
Fax: +49 2234/1821-445
email: inga.koenen@lekkerland.de
