Prospects and essential factors for Group’s performance
As a result of the current pandemic of the COVID-19 disease (caused by the SARS-CoV-2 coronavirus), in the
absence of available reliable and complete information and data on its effects, as at the date of
preparing the annual report, the Śnieżka Group - similarly to all entities conducting business activity
both in Poland and worldwide - is currently unable to forecast the consequences of the pandemic for the
macroeconomic and market environment. Therefore, the possibility of assessing the Group's development
prospects in the future is limited as at the date of preparing the annual report for 2019.
In the future, the Company's Management Board will monitor the potential impact of the COVID-19 pandemic
and will take all possible steps to mitigate its possible negative effects on the Group, if any. However,
due to the inability to obtain reliable assumptions as at the date of this report, all forecasts regarding
the future contained in the Group's annual report for 2019 - especially the description of development
perspectives of FFiL Śnieżka SA’s activities (the issuer) at least in the next financial year - must be
analysed taking into account the above said assumption.
Key factors relevant to the Group's prospects include:
short and long term effects of the COVID-19 disease pandemic, caused by the SARS-CoV-2 coronavirus,
in all aspects of the Group's business;
increasing the Group's presence on the Hungarian market by developing the market offer - the
Hungarian market is the second (after the Polish one) market of the Group;
macroeconomic situation in the world, including the main markets (Poland, Hungary, Ukraine, Belarus)
- including the economic situation in the construction sector;
changes in demand for the Group's products and goods;
changes in the prices of raw materials used for production;
changes in exchange rates (including EUR / USD, EUR / PLN, USD / PLN, HUF / PLN, UAH / PLN, BYN /
PLN) and possible devaluation or revaluation of individual currencies. Currently, the largest currency
risk for the Śnieżka Group is the risk of exchanging the following rates: EUR toward PLN and EUR toward
HUF (for more information, see Chapter 4, point 4.6. of “Financial risk” as well as consolidated
financial statements in notes: 38.2 and 39.3.2;
sales dynamics of all companies comprising the Group.
In view of the pandemic of COVID-19 disease caused by the SARS-CoV-2 coronavirus, there are no reliable
sources to predict the consumer behaviour, although this factor will most likely have an impact on
customer behaviour in markets where the Group companies operate. In the years to come, however, climate
change may affect the situation in the construction materials market, including paints and varnishes.
Weather conditions, such as those currently observed, favour the extension of the season of construction
and renovation works.
Individual companies of the Śnieżka Group continue to increase the numerical distribution of its products
and carry out scheduled marketing and sales activities tailored to local markets to support the sales of
products comprising the Group's brand portfolio. The Company constantly monitors the situation in the
paints and varnishes sector on crucial markets, which provides the opportunity to anticipate changes in
consumer attitudes and to adapt its offer to altering competitive conditions in individual countries.
The Company's Management Board takes into account possible decisions of public authorities in connection
with the COVID-19 pandemic, as well as long-term trends regarding the use of raw materials, social changes
or environmental regulations as well as their implications for the process of goods production and sales.
In view of the pandemic of COVID-19 disease caused by the SARS-CoV-2 coronavirus, it is currently not
possible to predict the prices of key raw materials used for production as well as oil and electricity.
The Group consistently implements a long-term development strategy consisting in the concentration of its
operations in selected countries of Central, Eastern and Western Europe and building the market leadership
in the sector of decorative paints on its four key markets: Polish, Hungarian, Ukrainian and Belarusian.
The Company’s Management Board stipulates that it cannot be ruled out that the COVID-19 disease pandemic,
caused by the SARS-CoV-2 coronavirus, and its effects - unpredictable at the time of preparing the Group's
annual report for 2019 - may in the future necessitate changes or total review of the strategy and
strategic objectives of the Company and the Group.
The most important strategic objectives of the Group and FFIL ŚNIEŻKA SA for 2020 and subsequent years
are as follows:
Strengthening the position in major markets and improving profitability
The Group's strategy for the coming years assumes concentration on its four key markets (Poland, Hungary,
Ukraine, Belarus). On the paints and varnishes market in Poland, FFiL Śnieżka SA remains one of the four
largest players, and one of the strategic objectives for the upcoming years is to maintain its leadership
On other major foreign markets, the Group will work on maintaining or strengthening its market position.
In Hungary, the Group will strive for improving the profitability of its subsidiary - Poli-Farbe Vegyipari
Kft. In Ukraine and Belarus, the Group will carry out work on matching the portfolio and distribution of
products - related to long-term political and macroeconomic uncertainty on both markets and competition
from producers offering low-quality products in Belarus.
Integration of Poli-Farbe with the Group
The integration process of Poli-Farbe with the Group has been implemented since May 2019. In the course of
these works, synergies are planned to be achieved over the next few years: primarily in the area of raw
materials purchase and R&D, marketing and sales as well as management controlling and accounting.
Poli-Farbe Vegyipari Kft., by joining the Group, has already gained access to the supply of raw materials
for production at more attractive price terms and conditions than before. Currently, the Hungarian
company, in cooperation with Śnieżka's research and development department, is working on optimizing the
portfolio and applying new raw materials to previously used formulations (recipes). The Company's
Management Board expects that for the most important products comprising the Poli-Farbe portfolio, this
process is to be completed by the end of 2020.
Ultimately, synergies should positively affect the margins achieved by Poli-Farbe Vegyipari Kft. In the
Management Board's opinion, the profitability of the Hungarian company should improve gradually from 2020.
The Management Board does not identify any obstacles for Poli-Farbe's profitability to increase to the
level achieved in the past by FFiL Śnieżka SA.
Erection of the Logistics Centre in Zawada
The new Logistics Centre is being built on a 15-hectare plot in Zawada near Dębica. It will be a warehouse
and office facility with an area of over 44 thousand m2, which will take over the function of Finished
Goods Warehouses located in Brzeźnica, Lubzina and Pustków. The investment - whose aim is even more
efficient and cheaper supply of the market with Śnieżka products - is to be put into use in the first
quarter of 2022.
Completed modernization of production facilities
Modernization (including automation) and expansion of production departments in Pustków and Lubzina will
be completed in the second quarter of 2020.
Main implementations within the area of digital transformation
At the beginning of 2020, the Company completed the main implementations planned as part of the Change IT
digital transformation introduced in cooperation with SAP Polska. The new software is to provide Śnieżka
with further competitive advantages in the field of modern sales management methods and customer
Development plans of the group
The Company’s Management Board stipulates that the COVID-19 disease pandemic, caused by the SARS-CoV-2
coronavirus, and its effects - unpredictable at the time of preparing the Group's annual report for 2019 -
may in the future necessitate changes or total review of the strategic objectives of the Group.
Development plans of the Group in Poland
On the Polish market, the Group intends to continue its development in the two largest segments:
on the independent market, consisting mainly of trade and service companies basing their
operations on handling contractors, investors and final consumers locally (approximately 65% of the
on the market of DIY stores (approximately 35% of the market).
The Company's strategy on the independent market for 2019 assumed the sales development and increasing
market shares. It was implemented primarily through activities focusing primarily on product categories:
used for walls (due to their greatest weight in market shares);
enamels for universal applications, with dedicated application on metal and for wood protection and
The sales development in 2019 in the independent market channel was preceded by extensive market research
of individual distribution links. As a result of the research, the Company continued the cooperation model
with distributors developed in 2018 (including a new incentive program). At the same time, 2019 was
devoted to developing a new value offer, in the form of partnership programs, which were announced in
The cooperation model of FFiL Śnieżka SA with distributors is aimed at building the availability of a wide
range of the Company's products. Consequently, the availability built by so-called “distribution quality"
is supposed to shorten efficiently the lead time of a wide range of products to retailers and as a result
to build more favourable service for the end customer.
The process of changes adopted by the Company in 2018 was continued in 2019 and included the following
use of pricing tools and focus on consumers’ needs,
promotions, which were based primarily on stimulating the purchase of the end user by analysing its
constant improvement of the level of business customer service through accuracy, lead time and
consulting and business analytics.
The above-mentioned activities were positively reflected on the market power of FFiL Śnieżka SA.
The sales development strategy on the independent market in 2020 will be based on the continuation of the
solutions implemented in 2019. The company will put emphasis on the systematic development of numerical
distribution, i.e. an increase in the number of stores where ready-to-use paints can be purchased from the
portfolio of FFiL Śnieżka SA (including new products). In addition, the Company will continue its
cooperation with distributors and retailer. The Company intends, i.a. to further develop the network of
"Company Stores" and "Company Showrooms" in partnership with business partners, based on a fixed business
The strategy will also include strengthening market shares in the segment of specialty metal products sold
under the Rafil brand.
In the DIY channel an important factor of the Company’s development in 2019 and subsequent years is the
planned increase in the number of points of sale in the so-called Polish sales networks, e.g. PSB Mrówka
(up to 450 stores in 2023) and Bricomarché network (this network intends to achieve the third position in
the Home and Garden stores segment). In addition, the Company is to develop cooperation with Leroy Merlin,
Castorama, Obi networks which, according to the previous assumptions, envisage an increase in the number
of branches. These networks are copying solutions from Western Europe into the Polish soil in the form of
stores, which are a bit smaller and at the same time are more focused on inspiring and comprehensive
solutions for the final customer.
Additionally, each participant of the DIY market develops an e-commerce channel, often in the form of
click&collect service, which may additionally translate into higher sales of paints and varnishes -
including the Company's products.
Taking into account the plans related to the dynamic development of the DIY networks, the Company plans to
continue its current activities with particular emphasis on the focus on the final customer service. At
the same time, the Company's activities aimed at building a value offer for business partners in this
channel will be continued. An example is a partnership program inaugurated in February 2019 called
“Leader” - an innovative project dedicated to owners, managers and sales teams of DIY stores. Thanks to
it, the Company offers the participants access to numerous benefits supporting their businesses’
Bearing in mind the current condition of the Belarusian and Ukrainian market, as well as the results of
the analysis, the Group will continue activities initiated in 2018 that will involve further development
of numerical distribution in the retail sales network. Also, the aforementioned activities will be
implemented on the Hungarian market.
The activities will be supported by:
concentration of commercial forces in the field on introducing the existing and new products to
retail outlets, which do not have them in stock;
changes in the cooperation model with existing and new business partners operating on particular
markets. The changes will mainly consist in building a wider range of products being in stock on a
regular basis in particular points of sales. The activity will be consistent with the tasks that the
Group will set out for the trading forces;
shortening the delivery time within the entire distribution channel (producer-final customer).
The implemented changes should improve the level of customer service and availability of the product
they are interested in. Additional activities that the Group intends to continue on the said market are
concentration in activities on the final customer;
supporting the omnichannel strategy;
optimization of the product portfolio in individual product group ranges;
launching innovative products in line with the trends of individual markets (on the Hungarian and
Ukrainian markets a noticeable trend of shifting sales towards premium and specialty products);
improvement of the level of business customer service through accuracy and delivery time;
The Group's long-term strategy in the area of sales development on other, smaller foreign markets
assumes optimization within brand and product management taking advantage of the Group's full production
potential. One of the most important point is to adapt products to local requirements and to adjust
The markets such as Sweden, France, Ireland and Croatia, where the total share in consolidated revenues
does not exceed 1%, the Group has so far cooperated with one company or sold small amounts of products
on an irregular basis. At the same time, they are the markets where the Group looks for business
partners and opportunities to increase sales.
The Group commenced to restructure the Export Department in order to make it more functional. New
processes have been developed to improve the efficiency of operations. At the same time, the Group's
strategy for the coming years assumes concentration on its four key markets, generating the majority of
sales revenues (Poland, Hungary, Ukraine, Belarus). At that time, the most important task will be the
further integration of Poli-Farbe Vegyipari Kft. with the Group.
The Group constantly monitors the situation in the paints and varnishes sector on crucial markets,
which provides the opportunity to anticipate changes in consumer attitudes and to adapt its offer to
altering competitive conditions in individual countries. Simultaneously, the Group is looking for new
and stable markets that can ensure development opportunities.