Annual accounts for the Kavli group, 2014: From 2 to 3 billion in 5 years

Bergen, April 11, 2015 – The Kavli group reached another milestone in 2014 with sales bypassing NOK 3bn. That means the group has increased its consolidated sales with nearly one billion kroner over the past five years.

“In 2014 we have carried out investments, acquisitions and pursued other measures which have prepared us for further growth in turnover and profitability,” says the group’s CEO Erik Volden. He has the top responsibility for the company founded in Bergen in 1893 which is now operating in Norway, Sweden, Denmark, Finland and the UK.

The international food group’s consolidated sales grew by 10.9 percent in 2014 compared to the previous year, and the company achieved an operating profit[1]of NOK 221.5m before tax, up 20.9 percent on 2013.

Transferring NOK 56m to the Kavli Trust

This was therefore a good year for the group’s owner, the Kavli Trust – a charitable foundation which grants considerable amounts of money to humanitarian work, research and culture.

“We are the only Norwegian grocery company which is fully owned by a charitable trust, and our most important job is to ensure that we create as much money as possible for good causes. The ownership is an important part of our culture, which both consumers and employees appreciate,” Volden says.

The Kavli group has worked actively with acquisitions and other sizable investments in recent years in order to create a robust business which can secure long-term contributions to the Trust.

NOK 56m will now be transferred to the Kavli Trust, but Volden says the aim is to reach annual transfers of more than NOK 100m in a few years from now.

Doubled sales in Sweden and the UK

The CEO says the group’s solid development is partly down to growth in two important markets. Over the past five years the group has doubled its sales in Sweden and the UK.

“A combination of organic growth and acquisitions has given us a position in these two countries which makes us an important partner in the trade and an attractive employer,” Volden says.

In 2014 Kavli has made further investments in the UK and Sweden by expanding the production capacity at daughter company Castle MacLellan in Scotland and by acquiring Svenska Smakupplevelser AB, a premium condiment company known for its acclaimed line of premium sauces and dressings in the Swedish market.

Q-Meieriene a growth engine

Q-Meieriene has become an important growth engine for the entire group. Since the dairy business was founded in 1998, Kavli has made considerable investments in the company, which has led to positive results in recent years.

“We see the greatest opportunities for organic growth at Q-Meieriene, where we are a small challenger in the Norwegian dairy market. We put a lot of thought into each investment, however, because we need robust and predictable framework conditions allowing us a decent return on our investments,” says Volden.

He points out that 2013 saw a weakening of framework conditions which resulted in a considerable negative annual effect in 2014. This meant that Q-Meieriene’s operating profit for 2014 was weaker than for the previous year, despite an increase in sales.

Acquisitions and recruitment affect the accounts

The group’s accounts reflect restructuring and one-off costs linked to acquisitions as well as the depreciation of values in Kavli’s Danish operation. Several acquisitions in later years have also led to a sharp increase in depreciation of goodwill and brands. The sale of property in Norway and Denmark has had a positive impact on the accounts.

Ambitions for growth

The Kavli group has ambitions to maintain its growth in sales and results through organic growth and new acquisitions. The company has initiated several initiatives to strengthen competitiveness both when it comes to innovation and cost efficiency, and expects an increase in operating profit margins in 2015 and beyond.

Results:

NOK million 2013 2014 Change

Sales 2711.0 3006.1 + 10.9 %

EBITDA 285.0 328.8 + 15.4 %

Operating profit[2] (EBITA) 183.3 221.5 + 20.9 %

Annual results after tax 104.9 93.3 - 11.0 %

For more information

Gerhard Blay, Managing Director Kavli Sweden, telephone +46 768895912

[1] Before goodwill and brand depreciation.

[2] Before goodwill and brand depreciation.