Annual Report 2013

Managing Director’s Review
Business Review - Retail

Bord na Móna Retail is the market leader in Ireland in the solid fuel heating market. We are also a significant player in the horticulture growing media and convenience fuel sectors. We operate a successful regional oil distribution business through our Suttons brand.

In the UK we offer a range of private label and branded products to the retail and professional growing media markets. Across Europe we market a range of professional growing media to industry specialists.

Innovation with a fresh approach

Our focus is on developing and delivering sustainable convenience and eco consumer products.

Air & Odour 
Abatement Water and 
wastewater

"Retail sales, including sales to other Group companies, reached €199 million, an increase of 9% on the previous year; the decline in growing media sales caused by the wet spring were offset by increased demand for heating products due to the prolonged winter in 2013."

Challenges

Growing Media Sales

Due to the wet spring, growing media sales were adversely affected in the UK and Irish horticultural markets. The poor peat harvest challenged supply chain management, especially in the international professional growing media markets.

Consumer Demand for Value

The depressed macro economic environment and weak consumer confidence continued to weigh heavily on sales of solid fuel, oil and convenience products. In such a challenging environment value remains critical. This outlook is likely to persist with consumers buying more frequently but spending less, in order to control costs and avoid waste.

Freight Cost UK

The reduced balance of trade between Ireland and the UK in recent years has impacted significantly on freight costs with reduced back-loading opportunities on exported products. The resulting cost increases have led to significant margin pressure as retailers continue to drive value for their customers.

Carbon Tax/Smokeless Zones/
Better energy regulations

The implementation of carbon tax on solid fuels from 1 May 2013, the expansion of smokeless zones and the obligation to support improved energy efficiencies for energy users creates a significant challenge to our traditional solid fuel product range. The likely impact will be rising consumer prices, leading to a potential reduction in demand. A broader portfolio of products will be required to grow market share.

Achievements

Sales Growth

Retail sales, including sales to other Group companies, reached €199 million, an increase of 9% on the previous year; the decline in growing media sales caused by the wet spring were offset by increased demand for heating products due to the prolonged winter in 2013. Through careful management of distribution channels, Retail capitalised on this opportunity, increasing sales of heating products by 22% on 2012. We extended the fuel range with the introduction of a new stove fuel during the year.

Business Reorganisation

The establishment of the Retail Group, a year ago, was a strategic initiative to transform the seasonal businesses of the Horticulture and Fuels divisions from a product-centred to a market-centred organisation. Against the backdrop of economic and supply constraints it is a significant achievement to have delivered growth in this first year of operation. The efficiencies accruing from this restructuring helped protect margins in an increasingly volatile market.

Commitments

Brand

The creation of a single, customer-focused business emphasises the company’s commitment to position Bord na Móna as a leading provider of seasonal products, from home heating to growing media. The Bord na Móna brand provides underlying support for Retail’s developing portfolio - a portfolio which the business is committed to expanding.

Sustainability

In line with the corporate vision, ‘A Contract with Nature’, Retail is committed to an increasingly sustainable approach to its business activities. As full members of the Growing Media Initiative in the UK, and European Peat and Growing Media Association (EPAGMA), Retail is at the fore in aligning products and activities with the sustainability objectives of these industry organisations. In particular, this includes the promotion and use of alternative soil enhancing materials.

Innovation/Product Development

As the largest producer and importer of solid fuel products in Ireland, Retail is committed to developing alternatives to traditional fuels that are not only compliant but also market-leaders in the provision of effective, sustainable and competitive solutions. In this regard, we will push ahead of legislation and regulation in product development, which will support next generation carbon-reduced products.