Operational reviews – Bidvest Czech Republic and Slovakia

Bidvest Foodservice Europe

Bohumil Volf: Managing director

Highlights Turnover of CZK8 323 million = EUR310 million (2013: CZK7899 million) Gross profit CZK2 052 million = EUR76,5 million (2013: CZK1 955 million) EBIT CZK646 million = EUR24 million (2013: CZK584 million) EBIT margin 7,8% (2013: 7,4%) In five-and-a-half years we have repaid two thirds of our acquisition loan (initial loan = EUR120 million) Market leader in Horeca foodservice distribution in both Czech Republic and Slovakia Significant growth in chilled products especially in red meat sector Gastrostella business consolidated and not generating any loss.

Management team

Innovation and new investment

	New sales representatives ordering system implemented including CRM
	Ice-cream factory in Opava (the biggest in Czech Republic and Slovakia) after complete reconstruction and machine innovation
	Permanent increase in turnover realised through E-SHOP
	Higher efficiency in customers call centre.

Disappointments and challenges

	Artificial devaluation of Czech currency koruna for about 10% has had a big impact in gross margin
	Retail business under extreme pressure
	Lower sales of frozen products in retail sector is pushing total gross margin down.

2015 targets, objectives and factors affecting future results

	Increase ice-cream market share in both Czech Republic and Slovakia
	Keep up the growth in HoReCa market in Slovakia and Czech Republic
	Increase profits at new game factory by better purchase of raw material
	Double the storage capacity in the biggest depot in Slovakia
	Increase chilled storage capacity in the Czech Republic
	Higher focus on increasing sales volumes
	Open the second retail shop in Kralupy (after first in Prague in June 2014).
	Increase turnover in ‘Italian style restaurant’ segment
	Plans for the fourth distribution depot in Czech Republic being finalised.

Changes in the operational environment

	Czech and Slovak economies still under pressure but positive signals noticed
	Energy prices stabilised
	Application of EU laws and regulations make it necessary to pay various fees and charges
	Higher personal tax on high-income groups in a tough economy
	Private brands have strengthened their position in the retail market.

Risks and responses

	Reliance on major retail customers – addressed by efforts to serve a wider spread of markets
	Poor weather in the summer can have significant impact as ice-cream sales make a big contribution to our business
	Possible salary increase for the low-paid group of employees (warehouse workers and drivers) might increase overheads
	Bad debts pressure due to competitive environment in HoReCa market.