Co-Ros Fond

Management review

DEVELOPMENT IN FINANCIAL YEAR2022Financial results for the yearAs 2022 unfolded, it became clear thatit would become a year anything butnormal. The terrible situation in Ukrainehave touched all of us, with its personaltragedies and devastating consequences.Ripple effects can be felt throughout theglobe, and we have seen energy- andraw materials prices soaring through theroof whilst supply chains continued tobe disrupted all over the world. On topof that, Covid have continued to play itsrole in many of our Asian markets.The ever-strong commitment from ouremployees and partners around theworld coupled with the impact of theabove-mentioned elements, have ledto a financial result in 2022 where ourstrong brands and products have secureda 12.3% increase in revenue (in reportedcurrencies) or 1,915 mDKK.Production cost rose significantly com-pared to last year as a consequence ofhigh prices on commodities and unex-pected high inflation. Distribution costand Administration cost were equallyimpacted by high inflation, high freightcost etc., but with our strong efficiencyagenda and strong cost control we man-aged to secure a spending in percentageof revenue slightly lower than last year.The time gap between the rising inputcost and increases in sales prices led toa decline in EBITDA of 23.5 mDKK thusending at 150 mDKK.We continued to invest in capabilities,systems and machinery, albeit at aslightly more prudent level than last year.Earnings before Interest and Tax (EBIT)amounted to 10.1 mDKK for the full year.Net Financials showed a significantincrease in expenses, leading to -130.3mDKK in 2022 against last year’s incomeof 111.3 mDKK. CO-RO have over theyears accumulated significant free cashflow, which is kept in the company boost-ing our solvency rate and providing asolid platform for future investments. Thefunds are invested through asset man-agement mandates in blue-chip banks.Unfortunately, 2022 was a terrible yearfor the financial markets, hence leadingto a very poor return on our securitiesof -102.2 mDKK. In addition, our globalfootprint in fragile markets exposes CO-RO to currency fluctuations. In 2022 wesaw significant devaluation of severalof our trading currencies, the EgyptianPound and Sri Lankan Rupee in particular.The operational result combined with thepoor financial items led a net profit for2022 of -115.5 mDKK.We are proud of the strong progress inmost markets with market-share gains insuch volatile times, leading to a revenuein line with expectations, as well as thegood progress in projects and initiatives,but the dire circumstances and delay inpassing on the high input prices, lead toan EBIT for 2022 which was below man-agement’s expectations.Balance sheet, Investments & CashFlowsCO-RO Group total assets at 31December 2022 amounted to 2,790mDKK against 2,934 mDKK at 31December 2021.Investments were slightly lower thanlast year as management decided totake a more prudent approach given thevolatile circumstances. We finished ourproduction facility in Bangladesh andestablished Ready-To-Drink productioncapabilities in Malaysia, while at thesame time continuing to invest in generalmaintenance and improvements in allour plants. All investments made in 2022were funded internally.Trade Working Capital declined slightlyin nominal terms despite the increasedactivity and ended at 496.5 mDKK or25.9% of revenue (down 3.5 %-pointsfrom last year). The high commodityprices as well as mitigating actions takento avoid out-of-stock situations from dis-rupted supply chains have increased ourinventory in 2022, but tighter cash-man-agement controls have let to lower re-ceivables offsetting the increase.Consolidated net cash flows ended at-110 mDKK in 2022 compared to -38mDKK in 2021. Cash flows from oper-ating activities decreased by 15 mDKKmainly from the lower profit as a resultof the high input cost. Investments wereslightly lower level than last year, butthe loss on securities from the collapseon the financial markets, led to the verypoor net cash flow for the full year.Group solvency rate remains high at69.8% vs 69.9% last year.