Annual Report 2018
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Annual Report 2018 View the digital version of the Barilla Annual Report on the Group website: www.barillagroup.com For over 140 years, Barilla has cultivated its passion for pasta, led by values which today inspire its mission: “Good for You, Good for the Planet”. 2 Summary Chairman’s letter 5 Consolidated financial statements for the year ended 31 December 2018 32 Directors and officers 8 Statement of financial position 32 Barilla’s history 9 Consolidated income statement 35 Statement of comprehensive income 36 Barilla Group 12 Statement of changes in equity 37 Statement of cash flow 38 Our purpose 13 Illustrative notes 40 Barilla worldwide 14 1. Group structure and business 40 Directors’ Report 16 2. Significant events after the year-end 40 3. Declaration of compliance with International Transactions involving subsidiaries 16 Financial Reporting Standards (IFRS) 40 Accounting standards - International 4. Basis of preparation Financial Reporting Standards (IFRS) 16 Accounting and valuation policies 40 General information 16 5. Change in the scope of consolidation 53 Consolidated financial highlights 17 6. Notes to the consolidated financial statements 53 Our brands 20 7. Financial instruments and net financial position 76 Group structure and organisation 23 8. Disclosures in accordance with IAS 24 for related Economic scenario 23 party transactions and key management compensation 82 Group operating activities 23 Capital expenditure 25 Appendices 83 Corporate Governance and compliance 25 Only one way of doing business: 1. List of companies included in the scope of consolidation 83 “Good for You, Good for the Planet” 26 2. List of investments in associated Risk management 30 and other companies 85 Significant events after the year-end 30 3. Currency rates of exchange 86 Management outlook 30 4. Summary of public disbursements in accordance with Other significant operating events 30 article 1 of Italian Law n. 124/2017 87 Related party transactions 30 Report of Indipendent Auditors 88 Corporate information and contacts 92 3 “Give people food you would give to your own children” Pietro Barilla From left: Claudio Colzani (Chief Executive Officer and General Manager), Paolo Barilla (Deputy Chairman), Luca Barilla (Deputy Chairman), Guido Barilla (Chairman). 4 Chairman’s letter 2018 was a particularly challenging year for the Barilla Group. The As far as Group investments go, in 2018 these came to 236 million progressive global economic slowdown, following several years euros (6.8% of turnover) reflecting our determination to continue of growth, created a scenario of great uncertainty and slowing to innovate our products, to increase our production capacity and to consumption trends, causing some companies to suspend their promote the reduction of our environmental impact. investments. The slowdown affected Europe and Italy particularly. After 14 months of uninterrupted growth, Italy entered a recession in Our strategy and our way of doing business continues to be inspired the second half of 2018. by a decade of extraordinary work carried out by the Barilla Center for Food and Nutrition Foundation (BCFN): a multidisciplinary In a global scenario full of anxiety, our 2018 turnover continued to center which studies food in its environmental, economic and social grow, reaching 3,483 million euros: an increase of 3% compared to dimensions. In this respect, in 2018 the BCFN Forum - in collaboration 2017 - net of exchange rate effects - thus maintaining the same growth with the United Nations Sustainable Development Solutions Network trend recorded in 2017. (SDSN) - was active in the three cities of Brussels, New York and Milan, highlighting best practices and potential solutions to the huge This important result follows the reinforcement of our long-term challenges faced by the global food system. growth strategy, consistent with our mission: “Good for You, Good for the Planet.” We are committed to contributing to overcoming these challenges, aware that we can play an important role simply by continuing to do In general, during 2018, our market share increased - especially in value our job better and better, with the commitment of all Barilla’s people, terms - and recorded significant growth in most of Europe, as well as in who accompany us step by step on this long, difficult but fascinating Italy and North America. journey. In particular: • in the “first course” segment, sales of sauces showed significant increases, while in the pasta market, the growth driven by the strengthening of our premium segment was significant, as were the investments in product innovations, such as the launch of legume pasta; Guido Barilla • in bakery products, our Wasa global development was redefined, while value generation in Italy was consolidated, with excellent results from biscuits and snacks. 5 “Un sogno chiamato cacao” is the title of the advertising campaign highlighting the Pan di Stelle brand’s commitment to a responsible and sustainable cocoa supply chain in the Ivory Coast and Ghana. The first episode, “Nyma’s Dream”, aired from September 2018 6 Find out more on #unsognochiamatocacao 7 Directors and officers BARILLA INIZIATIVE S.p.A BARILLA G. E R. FRATELLI S.p.A Board of directors Board of directors Chairman Chairman Guido Maria Barilla Guido Maria Barilla Deputy chairmen Deputy chairmen Luca Barilla Luca Barilla Paolo Barilla Paolo Barilla Chief executive officer Chief executive officer and General Manager Claudio Colzani Claudio Colzani Directors Directors Emanuela Barilla Emanuela Barilla Gratian Anda Antonio Belloni Nicolaus Issenmann Nicolaus Issenmann Andrea Pontremoli Andrea Pontremoli Antonio Belloni Board of statutory auditors Board of statutory auditors Chairman Chairman Mario Tardini Augusto Schianchi Auditors Auditors Alberto Pizzi Mario Tardini Augusto Schianchi Marco Ziliotti Independent auditors KPMG S.p.A. 8 Our purpose We bring to the world joyful and wholesome food habits, coming from clean and responsible supply chains, inspired by the Italian lifestyle and the Mediterranean Diet. Because food for Barilla is not just food: it is the pleasure you feel, the energy inside you, it is being well for many years to come, it is respect for us and for the planet we live on. With our know-how, with simple and authentic gestures we talk about our only way of doing business: Good for You, Good for the Planet. We are convinced that a company can only have a long term presence if it is committed to caring for people and the environment every day. “Good for You, Good for the Planet” is Barilla’s approach to give its contribution to the 2030 Agenda of the United Nations and the 17 Sustainable Development Goals. 13 UNITED STATES CANADA MEXICO BRAZIL Barilla worldwide 1 1 1 1 1 1 2 We have 28 PRODUCTION SITES, 14 IN 2 ITALY and 14 ABROAD, which produce over 1,900,000 TONNES of food 1 products every year, which we export to over 100 COUNTRIES. CANADA 100 COUNTRIES UNITED STATES 16 MEXICO BRANDS 4 BRAZIL CONTINENTS 28 PRODUCTION SITES 14 IN ITALY ITALY 14 ABROAD 14 EUROPE ITALY TURKEY ARAB EMIRATES RUSSIA SINGAPORE JAPAN 2 5 1 1 1 1 1 14 2 1 1 CHINA AUSTRALIA 8 10 1 1 1 1 RUSSIA EUROPE TURKEY JAPAN ARAB EMIRATES CHINA SINGAPORE AUSTRALIA LEGEND MILLS PLANTS OFFICES RESTAURANTS CUSTOMER COLLABORATION CENTER 15 Directors’ Report 2018 was marked by a progressive downturn in the economy Transactions involving subsidiaries following a number of growth years. The most significant fall was recorded in Italy, which went into technical recession in the last two The Canadian trading company MXO Global Inc., which owns the quarters. The global outlook is extremely worrying; the above fall in Tolerant brand that specializes in the production of gluten free, growth is compounded by conflicts surrounding international trade, legume based pasta, was acquired in 2018. uncertainties in the European Union due to the impact of Brexit and The following commentary provides a detailed review of the activities the electoral campaigns for the forthcoming European Parliament of the individual Group companies and Barilla Iniziative S.p.A. (“the elections that will take place in May. Company”) in accordance with the disclosure requirements of article Despite this overall situation, the Barilla Group continued to grow 2428 of the Italian Civil Code and article 40 of Legislative Decree 127 recording an increase of 1% in sales volumes and total revenue of of 9 April 1991, modified by L. D. 32/2007. euro 3,483 million, a 1% increase on last year and corresponding to a 3% increase net of the foreign exchange impact. The Group continued to strengthen its long-term strategy objectives Accounting standards - International in 2018, with particular focus on the following areas: Financial Reporting Standards (IFRS) • The Group consolidated its global expansion through growth in Central and Eastern Europe and Asia, in addition to strengthening The Group’s Consolidated financial statements have been prepared its position in Italy, Western Europe and North America. Sales of in accordance with International Financial Reporting Standards - sauces grew significantly, bakery sales were extremely positive IFRS (hereinafter IAS/IFRS) endorsed by the European Union. For any while pasta sales were stable. Market shares increased, particularly further detail on the accounting policies adopted, see the Illustrative in value terms, despite aggressive competition; notes to the Consolidated financial statements. • Strengthening of the premium pasta segment and increased focus on pesto products