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's activity report 2022

OÜ Nõo Meat Industry is the largest and most innovative meat industry based on domestic capital in Estonia. On May 25, 2022, the company celebrated its 30th anniversary.

The first sausages, sardines and hams were made on the basis of the former Nõo collective farm sausage factory. At that time, 100 kg of ham was produced per day, which was immediately sold out.

Soon, their first store was established in Tartu, they also traded at markets and started producing smoked sausage. During this time, the company has grown nearly 200 times, but still values family values and the importance of food made with heart.

The company's activity is the production and marketing of high-meat-content meat products. OÜ Nõo Meat Industry owns the most modern and technologically advanced meat cutting house in the Baltics.

We have always paid great attention to the high quality of products and have never used nutrient-poor, low-value bone meat mass in our products. The company has developed a marketing strategy based on the meat sector and consumer preferences of each target export market.

Overview of business activities in 2022, the company's turnover amounted to 41.90 million euros (2021: 37.38 million euros), which was 12.09% more than in 2021. 77.75% of the production was sold in Estonia, the share of exports was 22.25%. The volume of sold production increased to 8800 tons (2021:8708 tons).

Continuous product development has created a wide range. The diverse product portfolio includes more than 400 different widely recognized products ranging from semi-finished products to high-meat-content full-smoked sausages, meatballs and snack products, which are marketed under different brands both at home and abroad.

In 2022, we developed a new product brand „ Cheesy grill“, which includes Cheesy fry products with various additives. The company also introduced new semi-finished products from chicken and pork, new pork roasts, Wok products, meat rolls and meat pockets with different fillings. In addition, the sausage product list was supplemented with raw sausages, half-smoked sausages and salamis.

The economic environment in 2022 was still in the headwinds in the food sector, caused by high energy and raw material prices, the war in Ukraine that began in February, and the lack of labor. If in 2021 it was still possible to talk about the company operating with a profit, then in 2022 the situation was the opposite and most likely most meat sector companies ended up with a loss. In August of this year, the company was forced to temporarily stop production, turn off electricity and send workers on a break due to the extremely high energy price, because the price of 4,000 euros per MWh of electricity was so high that it was cheaper not to produce at all. Such a continuing unclear situation with constantly rising energy and raw material prices forces companies to be cautious about investments, as a result of which production is no longer sustainable. Unfortunately, it is not possible to pass on such a rapid price increase to the final price of the products. The sharp wage pressure is still a big problem.

Investments

The company continued to implement the 2021-2023 investment plan. Although due to the previously described economic situation, the implementation of investments was delayed due to supply difficulties, in 2022, 935,000 euros were invested in tangible fixed assets, including a thawing line (178,000 euros), new production equipment and other tangible fixed assets (164,000 euros). Part of the investments was covered from the prepayments of 2021 (93,000 euros).

Prepayments were made for production equipment for 686,000 euros.

Goals for the following financial years

We see that input prices are still rising, including, for example, the world market price of pork, which is at its highest level in the last 20 years. The consumer has also become increasingly price sensitive.

Nõo Meat Industry is moving towards automation, which adds efficiency, reduces costs and allows to produce products with a good price-quality ratio. Our focus is on higher value-added products, but we have also invested extensively in equipment and product development to achieve efficiency and volume savings and thus bring as affordable products as possible to the consumer. For this, we have already opened a new concept sales counter at the Tartu market, where non-standard meat products are offered at a special price in addition to store products.

The challenge for the food industry over the next 12 months is to adapt to consumer habits. If in 2022 the food industry was pushed by the crazy price increase of all inputs, now the decreasing consumption is added to this pressure.

Nõo Meat Industry continues to rely on innovation, offering new and higher value-added products, optimizing the product range economically and adapting to the mindset of retail chains. We take into account that there is a shift in the marketing strategy in the market. The share of Estonians' campaign sales is almost twice smaller compared to the southern neighbors. But this changes significantly and the importance of the „ yellow label“ exceeds the 50% limit.