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COMPANY REPORT

Lavazza Group carbon neutral by 2030 with first milestone reached in the ‘Roadmap to Zero'
Tuesday, 06 April, 2021, 08 : 00 AM [IST]
Turin, Italy
Lavazza Group took advantage of the presentation of its 2020 results to unveil the ‘Roadmap to Zero', its ambitious plan to completely neutralise its carbon footprint by the end of 2030, with an investment of about €50 million in 2020-2021 period alone.

In 2020, against a highly complex economic and social backdrop that has seen world markets severely hit by Covid-19, the group reported turnover of €2.085 billion and operating cash flow of €125 million, in line with 2019, as well as solid Retail channel growth in its core markets.  

Antonio Baravalle, CEO, Lavazza Group, said, “We are basing our approach to this complex period on three priorities: personal health and safety, business continuity, and future development. In 2020, we delivered good results despite the difficult period, pursued the development of our projects, and continued to look to the future by investing in and focusing on the innovation and sustainability that are increasingly central to our strategy.”

The group is therefore determined to continue to integrate ESG criteria into its business operations, with the implementation of an environmental sustainability strategy focused on carbon neutrality and the circular economy, in line with the UN 2030 Agenda signed in 2017.

There are various areas of action which will completely neutralise the group’s carbon footprint by the end of 2030 with a three-pronged approach: emissions monitoring and measurement; ongoing processes to improve efficiency and reduce impacts; and offsetting residual emissions that cannot be reduced.

This ambitious plan has already enabled the group to reach an important milestone at the end of 2020: zero impact from the direct CO2 emissions generated by all the company’s activities, including production facilities, offices, flagship stores, corporate vehicles (scope 1), and from indirect emissions generated by the purchase and consumption of electricity, heat and steam (scope 2). By the end of 2030, indirect emissions will be offset across the entire supply chain, both upstream and downstream of Group operations (scope 3), from green coffee to packaging, logistics and disposal.

One of the key milestones leading up to 2030 will be achieved through the ‘Roadmap to Sustainable Packaging', the strategic plan that by the end of 2025 aims to make the entire packaging portfolio reusable, recyclable or compostable: Sustainability remains one of the pillars of the innovation processes developed by the group’s research and development unit, based on the concept of Sustainable by Design and the principles of the circular economy.

A global Group has a responsibility not only to the environment, but also to the communities in which and with which it operates. This is the thinking behind the group’s allocation in 2020 of €10 million for projects to support healthcare, education and vulnerable groups in Italy’s Piedmont region. In addition, a further €2.5 million has been allocated to support local communities in Italy and abroad. Business continuity has also been ensured in this period characterised by the pandemic, during which the primary concern has been the safety of employees, whose efforts have been rewarded with objectives-based bonuses amounting to a total of over €4.5 million paid out in 2020.

Turning to 2020 business performance, the group reported solid results, even though the impact of Covid-19 and the restrictive measures introduced in the various countries has affected operating results.

“2020 got off to a very good start and then the outbreak of the pandemic changed everything. We are satisfied with the results achieved despite the complexity of the period, with a slight downturn in revenues, cash generation substantially in line with 2019, and a positive net financial position. Our growth was well above the market average in both the Retail channel and our main geographical areas,” said Baravalle.

On December 31, 2020, the group reported revenues of €2.085 billion, slightly down on the 2019 figure of €2.2 billion (-5 per cent). In terms of margins, Group Ebitda at 2020 year end stood at EUR 253m, against EUR 291m in 2019 (-13 per cent).  Ebitda net of donations fell -8.8 per cent on the previous year. Net profit amounted to €73 million compared to €127.4 million in 2019, due both to the real difficulties experienced during a complex year, but also as a result of the group’s decision to continue to invest, by allocating resources to personal safety and protection, bonuses for employees, donations to support communities, sustainability projects, research and development, and the improvement of information systems and production capacity. After deducting resources allocated for personal safety and protection and donations to support local communities, net profits in 2020 were down -34 per cent on 2019.

The Net Financial Position is positive at € 102 million (compared to December 31, 2019, when it stood at a positive € 82.1 million), with operating cash flow of € 125 million in line with 2019, confirming the Group’s financial solidity.

The Group reported a plus 17.3 per cent rise in Retail channel revenues, with growth well above the market average in key markets and all segments – Roast and Ground, Capsules, Beans. In particular, the numbers confirm the upward trend in the Beans segment, the most dynamic in the industry, which reported a performance of  plus 30.1 per cent, or 10 percentage points higher than the reference market (+20.1 per cent). Taking the 15 key markets into consideration, the group holds a position of leadership in the Beans segment with a share by value of 15.1 per cent.

At geographical level too, the group reported excellent Retail channel growth rates in Germany (plus 35 per cent), United States (plus 22 per cent), United Kingdom (plus 15 per cent), Russia (plus 30 per cent) and Poland (plus 10 per cent), while the group’s key markets of Italy and France grew by over plus 7 per cent.

The increase in the Retail channel partially offset the significant and inevitable contraction of the Out Of Home business (Food Service minus 40 per cent, Office Coffee Service minus 30 per cent) caused by the lockdown, the closure of cafes and restaurants, and reduced consumption in offices due to remote working. The downturn in the sector is the result of an exceptional and unforeseeable negative condition that has not affected the group’s growth strategies, even in this sector.

“In 2020, we never shut down our operations and have continued to invest in our activities across the board, giving a positive signal in the fight against the pandemic through donations to support the local communities in which the group operates. continued. The opening months of 2021, while encouraging, have continued to prove complex and we are sure we have the solidity and determination to meet the challenges ahead and pursue our Group’s growth, supported by solid resources, a coherent strategy and the skills of our people,” said Baravalle.

Lastly, in 2021 the group continues to be a Top Employer in Italy, thanks to continuous improvement centred on people and the ongoing quest for excellence in human resource management processes and strategies.
 
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