03 mei 2022
02:00
–
Guido Vanherpe, the CEO of La Lorraine, is experiencing some of the most turbulent times in his career. The hole that corona had made, Belgium’s largest baker was able to close last year. But the war in Ukraine forced him to halt construction of his factory in Russia. ‘Nevertheless, our ambition to achieve a turnover of 1 billion euros remains achievable.’
–
With a turnover of 885 million euros and 4,300 employees, La Lorraine is the largest baker in Belgium. It supplies bread and bakery products to the supermarket chains Delhaize and Carrefour and owns the Panos stores. Even in Turkey, La Lorraine sells bread.
–
Yet the family business of the East Flemish Vanherpe family has not been spared the capricious recent world history. It is experiencing major consequences of the war in Ukraine. As soon as Russia became an international pariah with the invasion of Ukraine in February, La Lorraine decided to build his Russian factory. on hold to put. The workforce in the country fell from fifty to ten people. A tough decision, because the construction works were already half finished and La Lorraine saw a new growth pole in Russia. Before the war, the country accounted for 3 percent of the turnover. In time, that share could double.
–
‘Automatic wage indexation is a good system’
Inflation not only makes raw materials much more expensive, but also personnel. Certainly in Belgium, where wages automatically follow the index. La Lorraine CEO Guido Vanherpe is in favor of automatic wage indexation. ‘The system creates trust. It protects purchasing power.’
–
Vanherpe is not in favor of an index jump, but neither does he support the call from some left-wing political parties to raise wages further on top of wage indexation. ‘It is better to give people who are having a hard time in the short term a one-off premium on top of indexation, for example for the suddenly rising energy costs.’
–
He is also not in favor of taxing richer Belgians and companies with high profits extra in order to reduce the government debt increased by corona. ‘Belgian taxes are already high for everyone today. In order to reduce the national debt, we mainly need growth. You get that by giving companies the space to do business and to invest.’
–
–
But CEO Guido Vanherpe is not giving up on his Russian dream just yet. “We hope to resume construction as soon as the situation returns to normal. We expect it to take at least six months to a year before we can make a decision.’
–
Russia is and remains an interesting growth country, says the entrepreneur. ‘The middle class is growing there and Russians eat a lot of bread. They are looking for high quality products. We can offer them that.’
–
Despite his positivism, the entrepreneur takes into account that La Lorraine will have to turn his back on Russia for good. The war could escalate further. But a withdrawal doesn’t have to be a disaster. The investment costs are included for the time being. This concerns about 15 percent of the budget that we invest annually at group level. The Russian factory is in good condition and guarded. It’s not a lost investment.’ In other words, the factory is salable if the company leaves Russia.
–
Grow in the East
La Lorraine can rely on its extensive expansion to sustain growth without Russia. Once it set up a frozen bread factory in Erpe-Mere in the 1980s, it started exporting to neighboring countries. And from there it went on and on. From 2000 it opened factories in the Czech Republic, Poland, Romania and later in Turkey.
–
We invest in digitization. Panos will have an online store, where companies can order breakfast and lunch.
Guido Vanherpe
CEO La Lorraine
–
–
–
‘Because we are so branched out, the uncertain situation in Russia does not jeopardize our growth ambitions,’ says Vanherpe. ‘Certainly in Eastern Europe, we can still double digit grow (with more than 10 percent, ed.)† The same goes for Turkey, the gateway to the Middle East.’
–
Last year, La Lorraine proved its resilience in times of crisis. It recovered from corona. Turnover went up 19 percent, gross operating profit even 29 percent. ‘We were hit in 2020 because the catering industry – good for a third of our turnover – had to close for months. Last year the catering industry recovered, and we were able to respond immediately to the renewed demand.’
–
La Lorraine was ready to invest again. Last year it spent 104 million euros on the expansion of, among other things, the frozen food factory in the Czech Republic and started the renovation of its factory in Erpe-Mere. That project will last five years.
–
For this year, La Lorraine again forecasts ‘significant growth’. The catering industry guarantees volume growth because it continues to recover from corona. But a significant part of the revenue growth will come from inflation, says Vanherpe.
–
Like all food companies, La Lorraine is feeling the consequences of the sharply rising commodity prices. It pays twice as much for its wheat and vegetable oil as last year. Cardboard is half the price. ‘Really every raw material costs considerably more than a year ago,’ says Vanherpe. ‘I’ve never experienced that in the 27 years that I’ve been CEO.’ Energy is also considerably more expensive, as are personnel costs.
–
Profile Lorraine
What: industrial bakery, active in more than 30 countries. It mainly sells its bread and bakery products to supermarkets and the catering industry. Also owns the sandwich chains Panos and Deliway, which together have about 450 locations.
–
Turnover (2021): 885 million euros (+19%).
–
Gross operating profit: 112 million euros (+29%).
–
Net profit: 25 million euros (3 million in 2020).
–
Owner: the Vanherpe family.
–
–
It is a threat to profitability, but La Lorraine is confident that it can secure its profits by passing on rising costs to the hospitality industry and supermarkets. The latter in particular are not happy about this, because they fear that the price increases will make them fall out of favor with the customer. They also say that some manufacturers are exploiting the situation to push through hard price increases. ‘That is certainly not the case with us,’ says Vanherpe. ‘We have no choice but to accept the increases from our suppliers, otherwise they will not deliver.’
–
Digitization
Shouldn’t food companies partly absorb the rising costs themselves with their profit margins? Some supermarket entrepreneurs think so. But Vanherpe disagrees. “If you have a very high margin business, you can consider it. But we cannot give up a margin, because we have to be able to invest. Supermarkets often insist that we invest, for example in innovation and sustainability.’
–
Investment is also necessary to realize the 1 billion euro turnover dream. ‘This is the only way we can continue to grow. Four years ago we invested in the production of donuts, from which we are now reaping the benefits throughout Europe.’ He also refers to the digitization plans. Panos gets an online store. ‘We mainly focus on companies that can order breakfast or lunch for their staff. It is then delivered by a bicycle courier from Deliveroo or Uber Eats.’
–
–
