Jean-Luc Jonet, Managing Director of the Cooperative and its agricultural subsidiaries (VIVESCIA Agriculture)
and Olivier Miaux, General Manager of VIVESCIA Industries and Managing Director of VIVESCIA Services
Review of the 2019/2020 financial year & outlook
What is your perspective on the past financial year?
Olivier Miaux – This financial year clearly demonstrates that VIVESCIA has genuinely made a new start. That fact is perfectly clear from all the strategic initiatives and transformation plans implemented within the Cooperative and across all VIVESCIA Industries’ businesses. And that is a very real source of satisfaction for us. But we can hardly discuss the past financial year without referring to its quite exceptional events, with the sudden emergence of a global pandemic, an unprecedented lockdown of three-quarters of the world’s population, and a brutal slowdown in the world economy, trade and tourism throughout the spring of 2020... This sequence of events has been an extremely testing experience for our employees. So I want to take this opportunity to thank all of them for the unwavering commitment and determination they have shown. They have succeeded in keeping themselves and their colleagues healthy, maintaining business continuity, and pressing ahead with implementation of our transformation and development projects. Those efforts have most definitely not been in vain. It is certainly true that the Group’s consolidated fi nancial statements have been heavily compromised by the health crisis, which has severely impacted the performance of our Malt and frozen bakery businesses. But the transformational changes made with great determination since summer 2019 have helped to protect the financial and economic health of VIVESCIA. They have put in place a solid foundation for recovery as soon as the health crisis is behind us, particularly in our processing businesses and consumer markets, and when the food service sector has returned to its normal vigour. In the meantime, we must remain patient.
More specifically, how was the year for the Cooperative and VIVESCIA Industries?
Jean-Luc Jonet – Despite the restrictions imposed by the health crisis, the Cooperative reported good financial results throughout the financial year, at the same time as delivering a satisfactory overall quality of service to farmers. It has met its budgetary targets, at the same time as proactively implementing its structural projects without missing a beat. The fact that the Logistics Performance Plan (LPP) is well underway is another cause for satisfaction. A great deal of interaction in the form of dialogue and educational initiatives has taken place between elected representatives, cooperative members and field teams throughout the Cooperative region. This is essential, because our transformation plan changes certain baselines. We are moving to a logistics system built around flows that have, in some cases, been redesigned, farm deliveries of inputs and more demand driven markets for grain. When we include our other operational excellence projects, we’ve already succeeded in cutting our operating costs by 4%. So I’d like to thank the teams for their commitment in helping us to achieve that.
I’d also highlight the effective way in which the processing of cooperative members’ grains has been optimised as a result of greater agility from our sales and logistics teams, despite the fact that the brewing, starch and ethanol markets were disrupted at the end of the campaign by the fallout of the health crisis.
The financial performance of the Cooperative’s agricultural subsidiaries Sepac-Compagri (trading company) and Compas-Minjard (agricultural supplies and packaging for winegrowers)
has been impacted by the decline in agriculture and the effects of the health crisis. SeVeal (input distribution) and VIVESCIA Transport successfully met their targets.
Olivier Miaux – For VIVESCIA Industries, it was very much a year of two halves. There was before Covid-19 and there was after! Until the end of February, the economic recovery was well underway, particularly in our frozen bakery business, which had been experiencing difficulties for some years. At the end of February 2020, operating profit (EBITDA) was up by nearly €20 million on the previous year, in line with budgeted targets and refl ecting the fi rst effects of the work done. This performance gave us a great deal of confidence about projecting how we would end the financial year. Without the health crisis, our EBITDA for the year would most certainly have risen by between 20% and 25%.
But the sudden emergence of the pandemic and the subsequent global lockdown brought this excellent financial trajectory to a very sudden halt. The closure of bars and restaurants and the suspension of tourism cut our fourth-quarter revenue by around €250 million compared with our projections, and resulted in an extremely significant reduction in the financial results of our frozen bakery and malt businesses, which are highly exposed to these food service markets. In fact, these two businesses together account for around 70% of total VIVESCIA Industries revenue. But I’d like to stress that despite this extremely disrupted trading environment, our other businesses – milling, maize processing, animal nutrition, biotechnologies and R&D – succeeded in delivering strong performances, thanks to all the hard work and agility of our teams.
It’s also important to remember that our transformation projects also powered ahead during the final quarter of the year. Serious as it is, the health crisis has shaken neither the commitment nor determination of our teams.
