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Business review 2009<br />
Outlook 2010<br />
The prospects for 2010 are positive. We expect further growth of our bottom line because of organic growth in the<br />
business units and further optimization of our operational activities. The volumes are also forecasted to increase<br />
because of the growth of private labels. In 2009, retailers enjoyed significant growth, <strong>de</strong>spite (or maybe thanks to)<br />
the difficult economic situation. Outsourcing by A-brands is still expected to increase.<br />
Development of the market<br />
Prices of raw materials, especially packaging materials, have a<br />
ten<strong>de</strong>ncy to increase in 2010. It is anticipated that retailers will<br />
increasingly use low value private label propositions in their<br />
promotions towards consumers. Market share of private label<br />
will grow.<br />
In line with the trends visible in 2009 we expect private label<br />
to grow its volume market share in non-alcoholic beverages<br />
in all our geographies. This increased market share will have<br />
its influence on bran<strong>de</strong>d propositions in the same category.<br />
It is not necessarily the A-brands that will suffer; they will<br />
keep looking for volume compensation by strong investments<br />
in innovations and promotions. It is more likely the less<br />
meaningful brands that do not succeed to excel in product<br />
and image that will feel the most pressure. <strong>Refresco</strong>, which<br />
besi<strong>de</strong>s being a private label producer is also a contract<br />
manufacturer for many local and international brands, might<br />
feel some volume pressure from their contract. It is expected<br />
that the growth of private label will, in 2010, also outperform<br />
the volume <strong>de</strong>velopment trend in contract manufacturing. The<br />
product mix of <strong>Refresco</strong> will shift slightly towards private label.<br />
“Our focus is on <strong>de</strong>livering<br />
Coupled with a solid un<strong>de</strong>rlying business and a diverse<br />
Sharehol<strong>de</strong>rs structure<br />
Since the foundation of the company <strong>Refresco</strong> has always<br />
followed a Buy & Build strategy, which needs the financial<br />
support of sharehol<strong>de</strong>rs. Given the stabilized financial situation<br />
in Iceland in 2009, our sharehol<strong>de</strong>rs can give us support for<br />
further executing our Buy & Build strategy, although the pace<br />
will be adapted to available financial resources.<br />
Budget 2010<br />
The Executive Board believes that 2010 will outperform the<br />
2009 results. There is overall growth of the private label<br />
market as a consequence of the economic downturn. A-brands<br />
have recovered from the first blow caused by an explosive<br />
growth of private label products in the first six months of 2009<br />
and adopted new strategies to regain their positions in the<br />
markets and to satisfy consumers. It is the less meaningful<br />
brands that will keep suffering.<br />
At this moment in time, the company has sufficient financing<br />
and has safeguar<strong>de</strong>d the support of major credit insurance<br />
companies. If nee<strong>de</strong>d, the company can use its additional<br />
revolving credit facility and <strong>de</strong>lay certain spending. The<br />
company is fully compliant with all the bank covenants and<br />
expects to remain so in 2010 and 2011.
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