CEO'S COMMENTS ON THE FIRST QUARTER 2020

Midsona's strongest quarter ever

The first quarter, with the emphasis on the last month, was impacted by the on-going Covid-19 pandemic. The effects for society, individuals and organisations were sweeping and in many cases very stressful. However, Covid-19 resulted in higher demand for our healthy and sustainable food products. Sales and EBITDA were clearly our best ever.

The growth for our ten prioritised brands amounted to 15 percent and sales for the Group as a whole increased by 20 percent compared with the same period last year. This is despite a continued negative impact for the Nordics from the concluded distribution assignment for Alpro that impacted the comparative figures for January and February. Adjusted for Alpro, the organic growth was 9 per- cent. As a consequence of the coronavirus outbreak, demand was the strongest in the month of March. The increase in demand was the largest in dry goods, breakfast products, rice and corn cakes, baking products, spreads, canned goods, tea and hand soap. The pattern was also reflected geographically. In markets with a high share of organic dry goods, such as Germany and to some extent France, sales were the strongest. As an individual brand, Friggs continued to have strong growth. We also saw a good development for our organic brands as consumers demanded more healthy products. The launch of our new common communication platform in the Nordic region for our brands in the organic product category, “One-Organic”, was well-received by consumers.

However, Covid-19 also entailed some negative effects for us. We have had to find alternative solutions for some of our goods and we are not ruling out continued problems, but our current assessment is that we will not lose large sales volumes due to delivery problems. Concern on the currency markets also entailed a continued negative exchange rate impact in Sweden and Norway.

Home consumption here to stay

Around 90 percent of our sales are “home consumption” while only around 10 percent of the sales go to the food service industry, meaning restaurants and other food service outlets. The strong sales in March can probably be traced to a certain “hoarding effect” as a result of Covid-19, but we believe that the trend towards greater consumption in the home will continue. Here too, we see a geographic pattern that follows the degree of shut-down in the society; the larger the shut-down, the larger the sales increase. Of the markets Midsona works in, restaurants are still open only in Sweden. When the restaurants open again, we believe that it will take a while before people find their way back to the same consumption patterns as before the crisis, and in this process, we see that new consumers have found our products. Demand for our products continued to be higher in April even after the initial hoarding effect subsided.

Robust organisation and strong finances

Altogether, we expect Midsona to make it through this health crisis stronger. I am very pleased and proud that the organisation proved to be robust and was able to produce and deliver in this time of worry. We have a strong financial position and see opportunities for continued acquisitions in Europe. Few other actors have the financial and organisational muscles to utilize the excellent acquisition opportunities now arising in the wake of the pandemic. The mood in our own organisation is aggressive and positive, but humble for the future.