Bpi A/S

Development in activities and financial matters
The consolidated income statement for the group shows a profit of DKK 25.526.134 against DKK 23.323.314 last year. EBITDA for the group, including EBITDA for associates on a 100% basis, amounts to DKK 55.553.834, where the EBITDA after deduction of minority shareholders part of EBITDA is DKK 41.830.185. The group's balance sheet as of 31 December 2023 shows equity of DKK 104.636.495 and a solvency ratio of 32,7%.
In the management’s review in the annual report for 2022, we expected group revenue in 2023 to be a bit lower than revenue in 2022, which also happened, even it was only less than 1% lower.
Significant events during the year
Foreign sales account for more than 80%, and this share is expected to be maintained in the future. We buy and sell goods in more than one hundred countries across all continents.
Foodservice
Our Foodservice department currently consists of divisions in Scandinavia, Germany, Benelux, Spain, and France. In many ways, the Foodservice department embodies BPI's DNA, as over 20 years ago, we ventured into importing quality poultry, especially from Thailand. Now, 20 years later, with animal welfare and climate firmly on the global agenda, it has proven to be a very good decision. In terms of food quality, animal welfare, and CO2 emissions, our regular assortment ranks at the top of the preferences expressed by industrial customers, chain customers, and especially catering customers, including restaurants and cafeterias. We also receive significant support from animal welfare NGOs. We repeatedly document our efforts for animal welfare and aim not only to comply with but also to surpass ECC requirements. We are working towards offering chicken with ratings of 1, 2, and 3 hearts by 2024.
For several years, we have supplied lamb to our customers under the brand "Recommended by the Animal Protection," which is the Danish animal welfare NGO. Our strengths in these various areas have positioned us as the main supplier to industrial customers like Nomad (Findus; Iglo, etc.) as well as chain customers, some of whom prefer us as their global supplier. Our high standards for auditing our skilled producers have also drawn attention from foreign customers, resulting in significant growth both within and outside Scandinavia. For several years, we have been the largest branded supplier to foodservice customers, fast-food chains, and takeaway chains throughout Scandinavia.

However, this growth affects our balance sheet negatively, as we must ensure that all our customers, including chains, cafeterias, and industrial customers, are provided with a secure supply of goods on a day-to-day basis. Therefore, BPI always maintains a sufficiently large inventory to ensure that our customers do not experience shortages. In 2023, we strengthened both our purchase functions, sales force, and marketing and controlling functions. At BPI, we budget for constant growth in our strategic plan for our foodservice divisions, a goal that has been consistently achieved year after year.

Retail Retail in 2023 was characterized by customers becoming even more price-conscious, leading major retail chains to trade down. This means they downsized package sizes or adjusted product quality to offer lower prices. This trend was quite positive for BPI, as we can quickly adapt and adjust our product portfolio through our extensive global supplier network. This resulted in a modest growth in our Danish business. In the Swedish market, where we primarily sell "non-Swedish-produced" products, we faced challenges due to the low Swedish exchange rate. However, despite this, we managed to grow in this market.

In 2024, we expect the trend from 2023 to continue, meaning the majority of our customers will still prioritize price over quality, organic products, and animal welfare.

Bulk meat The pork market was very strong in the beginning of 2023 due to a perfect combination of many factors, such as high inflation, low slaughters, and a high demand. It made prices go extremely high on some cuts and biproducts. The market lasted at a relatively strong and high level until July/August and then the demand dropped significantly. The importers were suddenly faced with slower turnover of inventory, which blocked cashflow and led to rumors of potential decreases in new offerings. The prices lowered in the end of Q3, but not as much as the market expected, and during Q4 we even saw some increases again. Mainly caused by the Christmas sales. Already in the end of Q3 it was clear, that Europe lost a huge chunk of the sales to Asia, and that Brazil took over as main supplier to the region. Prices were at one point approx. 50% lower from Brazil than Europe on prime cuts, which were making export to Asia almost impossible for European suppliers. The “luck” for the suppliers was that in the same period the slaughters were down, which absorbed some of the issues, but products like rinds, masks, livers, and fats were having a difficult time.

A new world for pork demand was a reality, as China officially went self-sufficient. Since Q1 2023 the monthly import by China has decreased compared with same period 2022 and in the end of 2023 the Chinese Government introduced a program to the farmers to lower the production of pigs in order to keep the prices more stable. In 2023, Hong Kong did almost 15% less biproducts compared with 2022, which also signals a dramatic change.

In the end of 2023, China allowed Russian import, which is expected to put even more pressure on European and American export. Brazil is expected to continue increasing their export to Asia and win even more of the market in the years to come. The importance of having sales to Asia is, that with a very few exceptions it is a higher value market, than the alternative African continent. Latin America is also becoming a bigger region in general for import, which we are going to explore in 2024.

The chicken market as well went through some big changes in 2023 with significant drops and peaks during the year. Brazilian suppliers were extremely competitive and aggressive in 2023 and we expect them to continue in 2024.

The beef market has settled at a relatively high level and is still seen as an “luxury” commodity, when speaking about main cuts. Biproducts are still selling to Asia and Africa, but it is very volatile and due to risk management, it has not been our main focus in 2023. In general, we see the trend of consolidation among the big producers and a wish to be more direct in the market to end-users to continue, but we remain positive for 2024 though, as financing and market knowledge are still important parts of being relevant in the business.

The markets for pork and chicken are expected to adjust in order to ensure a better balance in supply/demand and our diversity and know-how of markets in the regions in which we operate make us confident, that 2024 will be a reasonable year although some challenges are expected.

Milk Powder The price for milk powders has been relatively stable in 2023. For our main product – FCMP instant we have seen prices around 3200 USD/MT early in the year, with low in the summer with 2800 USD/MT and high at the end of the year at 3500 USD/MT. The main challenge has been getting the required quantities for our main markets and customers. We have been able to sell at higher than market prices mainly due to our brand Cow Pow being recognized and sought after by many customers.

We especially experienced growth in sales in Middle East, whereas Africa has presented difficulties due to the high prices.

By the end of 2023, the milk powder market has been exposed to a large price increase and very limited quantities available. Despite this, we have been able to get products and sell at high prices and have a good order inventory for the start of 2024.

This year, the department for milk powder has been able to develop new markets and acquired new suppliers in accordance with our strategy.

For the past two years, we have continued to purchase milk powder from Ukraine. The goods are shipped out of Ukraine via Romania, where shipment to the Middle East and the Far East is facilitated through the Black Sea. Despite the increased risks associated with the conflict, we have chosen to maintain this trade to support Ukrainian dairies. With Ukraine's lost exports to Russia and other former CIS countries in mind, it has been possible to increase purchases in Ukraine by up to 50%.

New activities, investments, and consolidation BPI has a significant share of the trade in especially poultry and cheese on the Scandinavian market. So far, we have not been able to cover the Norwegian market without using external trading houses. The Norwegian market is characterized by high import taxes and a very complicated licensing system. BPI has employed a very experienced manager to start our import into Norway. We therefore established BPI Norge AS in 2022, and we have great expectations for Norway in 2024 and beyond. For our many large international suppliers and partners, it is of great importance that BPI covers all of Scandinavia as a large home market. At the same time as the establishment in Norway, we have consolidated the current business areas and prepared the company for more profitable growth.

The group also continues to make due diligences on investments in representation internationally, securing our global presence. Expected developments Revenue in 2024 depends on the very volatile market seen in the last 12 months. We expect turnover to be a bit lower in 2024 compared to 2023. The group EBIT in 2024 is expected to be at the level of 2023. At the end of 2023, the liquidity situation was still very favorable for the BPI group. We utilized less than 32% of our credit line in Jyske Bank, and we remain in a very favorable situation in this area.