Iglo reveals ambitious growth plans as UK fish finger sales fall

(Date: November 18, 2013)

Iglo Foods Group is to unveil an ambitious growth strategy as it seeks to capitalize on growing demand for cheaper products, reports the Financial Times.

However, according to British newspaper the Telegraph, Iglo brand Birds Eye has seen sales of its fish fingers fall by almost 5% over the past year to 29,274 metric tons.

Elio Leoni Sceti, the former chief executive of EMI Music group who became head of private equity-owned Iglo in May, said he aimed to double sales of the UK-based business from €1.6 billion in 2012 to €3.2bn in 2020.

 

Though food sales in Europe have grown just 1-2% in the recession, frozen food – which tends to be cheaper – has outperformed, with sales growth of 4.5% in the year to the end of March, according to Kantar Worldpanel.

But revenues from fish finger sales have fallen, by 4.1% to £123.6 million, according to Kantar. Young’s Seafood, meanwhile, suggested consumers have been switching to other frozen products such as breaded, or purchasing from the chilled category. Birds Eye blamed the slump on comparisons with exceptional 2012 results.

Iglo’s implied goal of organic double-digit sales growth would mark a fundamental shift for the firm, which is Europe’s biggest frozen food company, producing almost two billion fish fingers a year.

Sales grew 9% between 2010 and 2011 but were flat between 2011 and 2012. Leoni Sceti said he was confident his new target was attainable without significant new investment. Nor would it come at the expense of profit margins which would remain above 20% in terms of earnings before interest, tax, depreciation and amortisation.

Iglo had a 30% share of Europe’s frozen food market but only 2% of the continent’s overall food market, the company said. “The assets are strong but they are being played out in a limited box. The right box is the ocean of food, not the pond of frozen food,” said Leoni Sceti.

He outlined a marketing focus that would shift from the frozen food ingredients to meals that could be made with its products.

Although he said the growth would be organic, Iglo “had the appetite” for acquisitions. The group bought Findus in Italy in 2010. “We are in a position to be an aggregator,” said Leoni Sceti. “Permira and ourselves are always open to opportunities at the right price and at the right time.”

Permira, which bought Iglo from Unilever for €1.9bn in 2006, failed to sell the business last year after bids fell short of the €2.8bn asking price. Instead, it undertook a dividend recapitalization, handing cash to Permira and its investors by adding €300m in loans and extending debt maturities.

Permira has refinanced €24bn of debt at its companies this year but has not said whether it is considering a refinancing of Iglo.