Good morning and welcome to Fodelia's Q1 2025 Business Review. My name is Riikka Wulff. I'm the CEO of the group Fodelia, and together with me in the studio today is our CFO, Kati Kokkonen.
Good morning.
Let's first have a look at our agenda. I'll go first through our Q1 highlights on a group level, and then we'll move into business development by business units. Then Kati will walk us through the financials, and at the end of the presentation, we have a few slides about the strategy and about the future. We should also have some time for questions if there are some. Yeah, let's start with the presentation and with the Q1 highlights on a group level. Our comparable net sales increased by approximately 10%. We expect the growth to accelerate toward the end of the year. Compared to the market, especially with Feelia, we did a lot better. I will get back to that later on in the presentation. We still see that there is potential to grow more at the end toward the end of the year.
Our profitability declined slightly compared to the previous year. Here also, we anticipate this to improve toward the end of the year. We will go through those reasons behind later on in Kati's part of the presentation. We have already started some measures as to how to improve when we move forward the year. Of course, we also expect the increasing net sales to improve our profitability in the upcoming months. Some highlights of Q1: Feelia's ready-made net sales grew by approximately 15%. Here, the market growth was around flat. Actually, it decreased slightly. Compared to the market, we did actually really well here. Of course, if you compare it with the exceptional growth that we had last year, compared to that, it is not that good.
Still, 15% in this market, I'm quite happy with knowing that we will be even improving probably toward the end of the year. With Oikia, we had a very good quarter with our own brand, Oikia. We have been working on how to get more visibility to our own brand, and the sale increase in Oikia brand was 35% in the first quarter. Quite happy with that figure. On a group level, we had several different development projects going on, which are a few examples here. We have invested in a more unified IT environment. We have improved our cybersecurity. All very important measures that we have taken. Sustainability is a very important issue for us. We have continued our work on this. We are now focusing on defining our SBTI targets and developing also our sustainability reporting.
All things that are of big importance for us, but also, of course, creating some costs for us. We have been talking about the synergies between Marjavasu and Feelia. Now that Marjavasu was merged to Feelia, and we produced the Delimax products at Pyhäntä. One concrete example of that was the certification, FSSC certificate, that we got also for Delimax products. Having had to do that in Kuopio, where we previously produced the juices and purées, it would have been a lot more difficult task. At Pyhäntä, we have everything at work, so it was quite an easy task to have also an FSSC certificate for Delimax products. Probably our people would not describe it as easy. There is, of course, behind a lot of very good work that we are at this stage. Compared to previous, it would have been a lot more difficult to do that in Kuopio.
One example of the synergies between Fodelia and Delimax at the moment is production-wise. Those were the group-wise highlights. Let's move into business development by units. Before doing that, just a reminder of how we are reporting our businesses. Of course, you being present here with Fodelia's presentation, you already know our group. Just a reminder, we report our businesses in two different business units. Feelia in the food service market, covering also Delimax brands, and then Oikia for the retail market. We have a joint venture together with Bravedo called Fodbar. I already referred to this in my earlier phase of the presentation, but the food service market as a whole was quite flat during the first quarter, slightly decreasing the overall market. If you compare Feelia's figures to that market, we did quite well.
With this about 13% growth in net sales in the first quarter is included, of course, Feelia and Delimax products. If you look just at the ready-made meals of Feelia, then the growth rate was about 15% in the first quarter. What we are not as satisfied with, of course, is our operating profit, and the change of that was slightly decreasing. We believe here that toward the end of the year, we can actually improve also in this one. If you think about the market where we operate, the operating profit of EUR 9.4% is not very bad. Actually, it's really good for our market. I think it tells about the overall concept and our belief in our concept that we think that we can actually do even better than this. We'll continue our work on this one. Some highlights of Feelia's business.
During the first quarter, we gained some 40 plus customers and some 50 plus delivery locations where we deliver our products. The ratio between these figures tells that they were quite small customers during the first quarter. Working with our customers all the time, we have quite a good pipeline with potential new customers at the moment. It has been actually the case the whole time. In quite challenging business environment, no lost customers for us. I think this was quite a good quarter for us in this sense. We have been talking about the Swedish market, and we are now happy to announce that we have opened also that market through our partnership with Sweden's leading food service and restaurant wholesaler, Martin & Servera.
This is, of course, not something that is immediately skyrocketing our sales, but it is something where we believe that the potential for the market is really good also in Sweden. The problem that we are able to solve on behalf of our customers is the same in Sweden as it is in Finland. We see great potential on that market as well. I am happy to start the cooperation with Martin & Servera. I already mentioned about the certificate earlier in the presentation. The pictures are from our trade event this March. We attended the fast food, café, and restaurant fair at the Helsinki Exhibition Center. As you can see here, we were there, joined Feelia and Delimax, both brands were present there.
Of course, fairs are also something that are causing us costs, but it's an important way of how to meet our customers, the potential customers, as well as the current customers that we already have. Had a very good fair this March. A few words about the number of customers and how our net sales break down into different customer segments. This is something that we are quite frequently asked of. The total number of direct customers at the moment is around 300 customers. With Q1, we were able to increase the customer base by some 40-plus new customers. Here again, we are now talking with the left-hand-sided figures. We are talking about the direct customers. Wholesalers are another case then. There we do not have as clear visibility to the end customers as with our direct customers.
are some 1,500 delivery locations at the moment, and the growth in first quarter was 50-plus new locations. Quite happy with these figures as well. If we look at the net sales breakdown by customer segments, here the pure public sector is around 38%. If we think about the private daycare and the private elderly care, they are also publicly funded. Even though they are private operators operating those elderly care homes or kindergartens, the money comes from the taxpayers, and it is the publicly funded money. These all combined are the whole public sector that we cover at the moment.
As you can see from the figures, we are quite strong already on these privately operated public customers, which tells, of course, it's really important when we talk about the elder ones or the kids, we want them to have the best possible food when they attend the daycare, for example. The food needs to taste good, and the nutritional values need to be good. It is also important to be able to operate efficiently when it comes to money. The private operators, of course, have a close look on this, how to do both good tasting, nutritional value, good nutritional value food combined with efficiency as how to operate. We believe that this concept will be the winning concept also in the pure public sector in the future.
The share of our group companies of the net sales is around 4%, and the private sector, lunch, restaurants, and cafés is around 10% of the whole net sales. Let's move to Oikia. Here we had a little bit of decline in our net sales when we look at the continuing operations. In these figures, comparable figures, we do not have the businesses that we divested last year. The negative change came from our web store. There we had worse net sales in first quarter compared to our previous year. Here the gross margin of that business was actually better euro-wise and especially in percentage-wise in the first quarter. How we operate it nowadays is more profitable than it used to be. In snack business, we had a growth in our figures.
Operating profit grew by 10%, but of course the figures are not that huge there, which ended up in a slightly better operating profit of 3.3% here. Kati will go through the figures more deeply later on in the presentation. Some highlights out of Oikia's business. I already mentioned that we have been investing in our own brand, and the sales of Oikia brand increased by 35% in the first quarter. With private labels, of course, it is a big part of the business. It is an important part of the business. We see that working here, working profitably in the future, we see that investing in our own brand is really important for us.
We've been campaigning together with our retail customers, and we've been also attending different occasions, for example, student events where our brand and our chips have been available for the students, trying to reach the future heavy users of snacks. That is something that we've been concentrating on during the first quarter. With our web store, we made actually quite a big change in the operating model during the first quarter. We have now an outsourced partner whom we operate with our business. The change from internally operated way of working to this outsourced way of operating caused us some decline in net sales, especially in March, making the handover for our new partner. April has actually started really promisingly. There are big changes there.
Our joint venture together with Bravedo Fodbar, there we gained this new big customer, Oma Häme, which we expect to actually raise our net sales quite significantly in the future. Good start for Fodbar for the year 2025. We will go through the financial development. Here you go, Kati.
Thank you. I will comment something about our first quarter financials in more detail. In the beginning, as a summary, our net sales, comparable net sales, increased by 10%. We sold last year Perniön Liha, Helsingin Makkaratehdas, and Pita Factory businesses, and we have deducted those net sales in comparison figure EUR 12.12 million. In our profitability EBIT, operating profit was a bit down from last year. It was EUR 0.7 million and 5.1% of our net sales. Here in this net sales row, we have official numbers.
Twenty-five, it's the same, but twenty-four, we have these sold businesses that affect on the profit in comparison figure. Our change was - 1.6. In profitability key figures, every one of those went a bit down. I will explain the reasons behind there a bit later. Here are some comments about our net sales by business segments. Feelia's net sales was EUR 10.7 million, and it increased by 12.8%. Oikia's continuing operations was pretty much at the same level than last year. Change - 1.4. Oikia's divested operations was EUR 1.5 million last year. That means the total amount of EUR 13.7 million in last year. This year, EUR 13.5 million. Here are some comments about net sales development for Feelia. We have combined Feelia's ready meals and Delimax choices in this graph. You can see that ready meals increased step by step.
Also compared to last quarter, end of 2024, there was significant change in ready meals. We have been able to get new clients there. We can get clients also throughout the year, not just in the beginning of the year like it looks like. Here is some net sales development for Oikia. You can see these discontinued operations. It is visible there in the first and second quarter and some part also in the rest of the year last year. The continuing operations was quite steady compared to last year. The first quarter is not the best one in snacks business. We expect some increase there. Also web shop went a bit down. Comments about operating profit. Feelia's EBIT was EUR 1 million this year and last year as well. Change - 3.4%. Oikia's continuing operations was about EUR 100,000. Change + 9.8%.
The divested operations only - 45 last year. What actually changed last year was this Fodelia's part. The parent company that serves the rest of the group, there was additional costs. We had EUR -348,000 minus in the first quarter. That is actually the biggest change when we compare the total figures, total operating profit. Here you can see operating profit development by business segments. We have combined here as well Feelia and Delimax together. As you can see, the EBIT level of Delimax and Feelia is about the same in the first quarter this year and last year. If we compare the last quarter last year, the change is actually very good. If you think about average EBIT level in Feelia last year, we have done better in this first quarter. Here are some comments about factors affecting our operating profit.
I must say that we are not fully satisfied with the profitability, but there are some actions, some one-off costs that affect our results. There are also things that we need to do for the future. We have considered and started the actions to improve our efficiency. One thing that affected our operating profit was increased raw material costs. We have not been able to pass those to sales prices yet. That is our target to do it as soon as possible, but it takes some time based on the contract conditions. In our production, the costs were higher. We were not as efficient as we used to be. We also have possibilities to improve that. We have actions there that we have started. There were some sick leaves that also caused some challenges.
We need to have some temporary labor that causes additional cost. We made some efforts on our marketing. We had exhibition expenses. We had other marketing investments. We had promotional campaigns. All those affected our operating profit. We see that in the long run, this needs to be done. This makes us stronger in the future. We can grow our sales as well. There were some other development projects already mentioned. Sustainability reporting. Also IT environment. We have now more univite. There were some investments in cybersecurity. This caused some costs and will also have during this year. Some of those were in the first quarter. One-off costs. We had double costs related to management as we have now new CEO and the previous one.
Nothing very big, but still it affected on the first one. A lot of small things that together cause some challenges in our operating profit development. Here are other key figures. Profit for the period. Very similar than other profitability key figures. Same change. Equity ratio is high. I'm happy with that ratio. Net carrying as well went down from last year. We have a pretty good return on invested capital. It's about 17%. That I'm also quite happy. Average number of personnel increased a bit in this first quarter. One topic what we had in first quarter. We had general annual meeting. There is a new Chair of the Board. Previous CEO Mikko Tahkola moved to board and is now the Chair. Previous Chair Mikko Paso is Vice Chair. The rest are the same personnel there. The same members in the board.
Markku Lampela, Mark Muuberi, Emma Tahkola and Erkki Järvinen. Riikka will continue about strategy.
Thank you. Yeah, we have actually only one slide about the strategy at the end about Feelia. I want to mention anyhow that we also see growth potential with Oikia. It's just a different case there. As I mentioned before, we have invested heavily on our own brand building. With Feelia, I think I believe we have somehow game-changing platform, game-changing concept here as how we operate on this market. If we think about the concept, there are clear underlying trends or key trends actually that are our concept answers to all of those. For example, social and healthcare reform, which has been going on here in Finland for quite a while now, there will be new ways of how to operate in the regions.
We have a good concept together with the thoughts of how to renew how to operate the business or the public platform, so to say. The municipal budget pressure is something that I think affects about all the municipalities here. We have a more cost-saving concept compared to many other players here. The population is aging. We have overall quite a unique global situation at the moment, causing some uncertainty for all of us. Of course, climate change is affecting all of us. If we look at our concept, how we operate, Feelia's ready meal concept enables the provision of nutritious food without the need for a heavy central kitchen model. That is the core of our concept. Producing the food at one big kitchen instead of many small places around Finland is a lot more efficient way to do that.
If we think about the younger ones or the elderly ones, the most important thing is that they have a tasty food that has good nutritional values. We have an efficient way as how to do that, to be able to create cost savings for our customers. Our concept also helps to reduce or minimize even the waste. You can see in the picture how our food is packed. It's not probably the most beautiful way as how to pack the food, but it's an efficient way to pack the food. We have a long shelf life with our products, which means that it's possible to order the food only once in a week or even once in a month if you have enough storage room where to put it. There is no need for cars to be driving or trucks to be driving every single day.
We can produce this both in a responsible way and in an efficient way, causing some cost savings for our customers. We have also created our own so-called FERP, our own management system as how to order the food in an efficient way. You do not need to know anything else except how many eaters you will have in any certain day. Our system will take care of the rest. There are also always surprises happening. If there are fewer people attending the lunch, for example, compared to what you thought, you can easily just warm up as much food as you need. The rest will be good for the next time. You will have the same food on your list. Product development is, of course, a crucial part of the concept. We are all the time renewing the list of food that we have.
For example, thinking about the climate change, we should consume more plant-based protein. We have an active product development on the plant-based proteins. I'm happy to say that we have really good vegan food in our selection. Thinking about the global uncertainty, we need to have temperature-free food that if there is, for example, a shortage of electricity, there is food that can be saved or stored in room temperature. We have been creating that selection during last year already. That is something that is an add-on to the customers that we already have, the room temperature food that can be stored in room temperature. It is also a way to have the food for the exceptional situations for any of us or any player in the market. We see that there is growth potential as such with that selection.
All these key trends and the concept how we answer these key trends are behind our belief in our long-term financial targets as well as our guidance for this year. We see that there is huge potential for the concept that we offer. We are already reaching that potential here in Finland, but there's a lot of room for growth. Now we are happy to tell, as I did earlier in the presentation, that we are also starting to operate in Sweden. We still believe that we will be hitting the EUR 100 million by 2028. Our guidance for this year remains the same. We expect our net sales to be between EUR 58-63 million with operating profit margin improving toward the end of the year. This was the presentation part of today.
I believe that we had some online questions as well.
We have some. I will combine certain questions because they are pretty same. There are a couple of questions about the Swedish market, that how potential we see that and what is our realistic expectations in the Swedish market.
I do not want to go into specific numbers at this point. As I already mentioned earlier, we do not see skyrocketing figures this year. We believe, however, in the longer run that the market, the Swedish market, is bigger than the Finnish market. We see substantial growth potential in the Swedish market. Sort of unclear answer, but I do not want to go into specific numbers at this point. We see huge potential there and are now starting to operate there. Yes.
There are a couple of questions about the Fodbar business and how we see that new contract will affect Feelia. That is a good question. I should have mentioned that in my presentation. Thank you for whoever put that question on the list. We, of course, see a great potential for Feelia as well. With Oma Häme, new customer that we gained there, it is affecting Feelia's numbers. Not that much in our estimates yet. When we look at next year, 2026, for example, we see that it will be affecting our numbers.
Yes. There is a question about Fodbar's profitability currently. Maybe some comments that the margins in Fodbar business are lower than in Feelia's business. What is very positive is that it is now making profit.
In the beginning of this company and its business, we did, or actually they made some losses. Nowadays it's a profitable company. The margins are lower than in Feelia's business.
Nothing to add on that.
There are questions about our increased costs and what we are going to do about it. How can we take those in our net sales prices? Can we raise those?
Yes. We are very cost-efficient for our customers. I believe that even if we bring the increasing costs for us into the prices, we are still very competitive when it comes to prices. Yes. Of course, it takes some time. We have contracts for certain periods of time. It doesn't happen instantly, at least not with all the customers. It will take some time.
There are questions about efficiency measures, what we are going to do. Give examples.
Yeah. I cannot say some exact examples at the moment. It is the whole process that we will be going through together with our great team. However efficient you are, there is always room to be more efficient. It is about going through and streamlining our own operations. Every single step of the process needs to be gone through. Nothing big there. I think it will be more a lot of small things that we will improve on, which will add up to a better profitability towards the end of the year and towards the upcoming years.
Yes. Most of those I think we have covered in our presentation.
Maybe you just repeat that how you see this business activity in Feelia, Feelia's business activities in market or market generally.
There are potential tenders where we will be attending. We have active customer work with our sales team all the time. I see the market very good for Feelia. The overall market, as we saw in the figures, hasn't been growing, hasn't been that good. Especially our concept being the somehow unique concept in the public sector is something that I believe very strongly in bringing us the growing revenue in the future, growing net sales and also growing revenue in the future.
Yes. We got thanks for having this presentation in English. This was actually our first time.
This was first time ever. Thank you for attending and thank you for very good questions. Thank you.