A-INSIGHTS is specialized in analyzing company figures, which captures detailed information on the activities of companies and explains the drivers behind their performance. This blog contains a combination of financials and news sources.
- Net sales development (2021): above average
- Operational profit (2021): above average
Le Duc is a Dutch family business founded in 1998 by Dick den Hertog. The company began as an importer of onion rings, but has expanded to producing, marketing and selling various types of cheese, fruit, potato and vegetable snacks. Besides producing snacks under its own brand "Le Duc" it mainly produces snacks under private label.
Since Le Duc operates in a category that benefits greatly from current trends toward meat substitutes and healthier living, let's take a closer look at their performance and see if they are growing with the category.
Full recovery from pandemic-driven sales decline
Le Duc has shown strong growth in net sales in recent years. Over the period 2017-2021, the company grew an average of 10.9% (CAGR) per year. One of the factors that most likely influenced this strong growth is the general trend toward meat substitutes and (frozen) vegetable snacks. The vegetable snacks category as a whole is growing rapidly and major players are showing their interest in the category. Proof of this is McCain's acquisition of Scelta Frozen, Le Duc's main competitor in the Netherlands.
Another factor that has contributed to the strong growth is the opening of a third production line at their Stellendam facility in 2019, which has significantly increased Le Duc's production capacity. Although the company was on a growth path, a sales decline (-8.7%) was almost inevitable in 2020, as a large portion of Le Duc's customer base was affected by pandemic-driven foodservice lockdowns.
Le Duc did not have to suffer for long and fully recovered in 2021 with net sales growth of 35.6%. The main driver of this growth was increased sales in the Netherlands, where sales doubled from €7.3 million (17.8% of net sales) in 2020 to €19.6 million (35.6% of net sales) in 2021. Abroad, net sales remained about the same. Le Duc offers no explanation for the strong increase in sales in the Netherlands, but presumably it stems from an expansion of their customer base with for example a potato processor (like Aviko or Farm Frites). This party then ships Le Duc’s products around the world with their own fries (kind of like a combined package).
Breaking the trend of declining profitability
In the period 2017-2020, Le Duc faced a year-on-year decline in profitability. Their EBIT% went from 8.6% in 2017 to 5.5% in 2020. This development is mainly caused by rising personnel costs and, in 2019 and 2020, higher depreciation costs due to the opening of the third production line.
Partly to reduce these costs, Le Duc has invested in an ERP system in 2021. Coen Slurink - Financial Controller at Le Duc - says of the system, "Where we can automate, we want to do that. The more you grow, the more you will benefit from it." With the new ERP system, the company can focus not only on filling capacity, but also on organizing smarter. Our expectation is that it will allow the company to return to profitability; provided the economic climate remains good and that it can pass on increased costs to customers.
The first signs of turning around the trend of declining profitability can be seen in the 2021 figures: Le Duc realized a slight increase in EBIT% (5.8%).
Is the future in retail?
Le Duc has found new growth opportunities and wants to expand to the retail sector. To ensure the retail segment will be targeted properly, the company will aim attention at high-quality and efficient production, which should be supported by the new ERP system. This is a key success factor as the private label segment in supermarkets is known for its low margins and not the high margins that are typically experienced in the food service industry. What might work in Le Duc’s advantage is the fact that the assortment of vegetable snacks in supermarkets is still relatively limited and emerging. The figures of 2022 will have to show whether Le Duc was indeed able to shift its focus increasingly to retail.
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*For the European landscape, A-INSIGHTS has analyzed the 30 largest appetizer companies, with a net sales of €30 million and more.