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European Business News – Week ending February 18, 2011

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European Business News – Week ending February 18, 2011

February 21
08:50 2011

The results season is now underway with many of the major food and drink companies across Europe reporting full year performances during the past week. The 2010 results show a marked improvement but this is hardly surprising due to the comparison with the extremely tough trading conditions of 2009, which coincided with the height of the international financial crisis and the start of economic recession.

Premier Foods reported a pre-tax operating loss of £98 million for 2010.

Recovery is, however, patchy with consumer confidence still weak in many markets in Western Europe, notable the UK and Ireland, due to the impact of austerity measures and high unemployment. All of the companies posting results express concern about volatile and escalating raw material costs. Another common theme is the continued focus by food and beverage manufacturers on driving operational efficiency and accelerating innovation across all markets.

Future growth for companies such as Danone, Nestle, Pernod Ricard and Heineken is chiefly reliant on their exposure to fast growing emerging markets. However, Premier Foods, the UK’s largest food producer, is dependent on its domestic market. While its branded business held firm in 2010, its non-branded operations proved problematic, especially the Brookes Avana own label bakery and prepared foods business where an impairment charge of £125 million was incurred, leaving Premier Foods with a pre-tax operating loss of £98 million.

Indeed, the difficulties within the UK own label food sector were also highlighted during the week by Kerry Group’s decision to close its frozen foods factory at Flint in Wales, with the loss of 318 jobs.

With the recent disposal of its meat-free and canning businesses, Premier Foods has now managed to reduce its debt mountain from £1.2 billion to below £900 million, as it pursues its strategy of growing its brands.

Leadership Changes

Benoit Testard is the new group chief executive at United Biscuits.

There were a number of key senior management changes during the past seven days. United Biscuits, the leading European manufacturer of biscuits and snacks, promoted Benoit Testard to group chief executive. United Biscuits is currently for sale with a £1 billion-plus price tag, as its two private equity owners, Blackstone Group and PAI Partners, seek to exit.

Stephen Twaddell has been appointed as president of Kellogg’s £2.2 billion turnover European operations. Stephen Twaddell has been with the world’s largest breakfast cereal manufacturer for 25 years.

Tony Maher will leave Wimm-Bill-Dann Foods in May.

Wimm-Bill-Dann Foods, the Russian dairy and food group which was recently acquired by PepsiCo, is looking for a new head following the decision by chief executive Tony Maher to leave in May. A native of Ireland, Tony Maher has shaped the development of Wimm-Bill-Dann over the past five years. Prior to that he worked for almost thirty years with the Coca-Cola system, including more than a decade in the Russian market.

Alan Williams, formerly with Cadbury for over 18 years, is joining Irish and UK convenience food group Greencore as chief financial officer in March. He joins Greencore at a critical stage in its development, following the recent failure of its bid to merge with Northern Foods in an all-share deal.

Northern Foods Saga

Greencore is reported to be seeking a partner to make an improved offer for Northern Foods with a cash element involved. It is understood to have held discussions with a number of major food groups, including Nestle, as well as some private equity firms. Time is running out though for Greencore as the March 2nd deadline approaches.

Meanwhile, Ranjit Singh Boparan, whose Boparan Group holds pole position in the race to acquire Northern Foods following a £342 million recommended offer, is continuing to develop his core UK chicken processing business. As part of its strategy for growth, 2 Sisters Food Group is investing £30 million on a state-of-the-art food factory in Thetford, which will serve as a platform for growth for the company’s prepared foods division over the next decade. The new factory is due to open in spring 2011.


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