4Q2021 vs 4Q2020 in numbers
*AOV = Average Order Value
**Conversion = The percentage of shop visitors who bought something
Important developments during 4Q
As we have been saying, the whole year’s result for Euroeat will be defined based on how we perform during the 4Q. And while the quarter was a bit of a roller coaster for us, we are very happy to report that our main target for the year 2021, breakeven (EBITDA) by 4Q, was achieved (around 2%)! We were EBITDA positive both at the Group and Ltd (China) level. Oy (Finland) needs more time, but we will fix that during 2022.
4Q quarterly revenue was all-time high and for the first time ever, we exceeded 1 million RMB (> 138000€) monthly revenue in November!
The positive EBITDA for 4Q is even more delightful for us as the main shopping festivals, 11.11. and 12.12. were a mixed bag as such: the sales growth for the festivals was a disappointment, we were clearly aiming higher (as you can also see here by comparing these 4Q numbers with our 3Q numbers: https://euroeat.com/euroeat-3q2021-business-review/).
The overall demand was not there. And this was a market level phenomenon, not only Euroeat specific, although there are many things we need to still improve. Lacklustre 4Q sales is naturally also reflected in our full year sales revenue which fell short of our targets, but more about that once we get the audited numbers for the full year.
Having said that, we do have to be happy with our sales growth: 11.11. sales revenue grew 70% compared to 2020. And especially as with this lower level of revenue we were able to turn the operations profitable. And there are many things we can do with our partners on Moomin Characters side to further strengthen the development during 2022 and beyond.
Also good news from the funding front! We have been working with our strategic partner ATC to strengthen Euroeat’s capabilities growing the business in China: spring 2020 we signed the credit line with ATC to be used for international sourcing during 2021. In 3Q the credit line was temporarily increased to cover higher volumes of 11.11. and 12.12. The credit line has thus been in heavy use & worked very well for both parties. During 4Q we agreed to extend it to cover the whole of 2022. This will be again important for us as the volumes keep growing & need for funding remains relatively high.
Already early on 2021 we noticed that the demand for locally in China produced goods is growing steadily. Covid-19 has further sped up this process as consumers are shying away from imported goods due to corona concerns. Increase in local sourcing was one of the major themes for us throughout the year, in 4Q roughly 80% of our overall sales consisted from locally sourced products!
As you might remember, we have been working on our “own” Moomin production. We are happy to report that as of end 2021, we have three designs approved by Moomin Characters. Production & sales will kick off early 2022!
Looking ahead to 2022
As our strategic theme for 2021 was breakeven, for 2022 and beyond it is profitable growth. We have been working hard with our partners internationally and locally in China to build sustainable foundations for this growth. Several good news to be shared on this front during the coming weeks & months.
We are still at the very beginning on this online journey with Moomins in China. There is plenty of upside in the Moomin related products alone, but we must focus on increasing the traffic and the overall awareness of Moomin characters. And when we say “we”, it doesn’t mean Euroeat alone: together with our partners from Moomin Characters, locally licensed manufacturers and other strategic partners globally & in China working for Moomins.
In order to build profitable growth, own production is important for Euroeat. We must keep our eyes on our margins: own production will help as their margins will be clearly better than with externally sourced products. Own production will thus be a standard theme in our upcoming business reviews.