Premium Brands Holdings is looking to add almost C$1bn ($698.4m) to its revenue coffers as the Canadian food business bagged yet another acquisition.
As any potential damage from US tariffs on Canada was generally shrugged off by president and CEO George Paleologou last week, the manufacturer of fresh meats, seafood and bakery has guided to a sales revenue target of C$7.2-7.4bn for the new fiscal year.
Reporting a 3.3% increase in revenue to C$6.47bn in the 12 months to 28 December, Premium Brands announced a deal last week for Peoria, Arizona-based premium sausage manufacturer Denmark Sausage for $21m US dollars.
The acquisition hungry retail and foodservice supplier had already revealed a trio of new incumbents in December – NSP Quality Meats, Casa Di Bertacchi and Italia Salami. The first two are based in the US and the third in Canada.
Paleologou confirmed in last week’s results presentation to analysts that the US constitutes about 60% to 65% of the company’s organic growth outlook, with a local manufacturing presence largely guarding Premium Brands against the Trump tariffs due to come into force on Canada in April.
“Ultimately, we’re trying to grow the business and we’re trying to improve our existing businesses. The four acquisitions that we’ve done will be incredibly accretive ultimately for our businesses,” Paleologou said.
“We’re assessing all acquisitions in a conservative way. We’re not going to be aggressive in terms of valuation. If we find acquisitions that help our growth, they’re very accretive and improve the profile of our various businesses, we will do that.”
Paleologou described Denmark Sausage as being similar to another portfolio business – Isernio’s, a premium sausage, mince and marinated pork and chicken products company in Washington State.
“We want to build Denmark similarly the way we built Isernio’s since we purchased it. I think Isernio’s is four times bigger today than when we bought it a few years ago, and we see similar growth opportunities with Denmark,” Paleologou told analysts.
US tariffs on Canada are due to kick in on 2 April, along with reciprocal taxes from the Canadian side.
“Canada has also imposed a first round of tariffs on $30 billion of certain US goods, with a second round on a wider list of US goods valued at $125 billion expected to come into effect in early April,” Premium Brands acknowledged in its results statement.
“Discussions between the US and Canadian governments remain ongoing, but there is no assurance that these discussions will result in a successful withdrawal or reduction of tariffs.”
While Paleologou said the company’s local manufacturing presence in the US and Canada markets generally insulates Premium Brands from the tariffs, it does ship a certain amount of business across borders.
“We are confident that we will be able to largely mitigate the impact of tariffs on these sales,” Paleologou told analysts.
Both Premium Brands’ main revenue generating division, Specialty Foods, and its wholesale business unit Premium Foods Distribution, have some exposure. In cooked meats, for example, some C$300m is shipped across the border.
“In terms of our Specialty Foods segment, its diversified network of production facilities across Canada and the US will enable it to shift production of many of its products crossing a border to the jurisdiction in which they are sold,” Paleologou explained.
“In terms of our Premium Foods Distribution segment, processed lobster is the primary product crossing a border. However, this is produced from a scarce resource and as a result customers have very limited supply options.
“Furthermore, our Premium Foods Distribution segment has major lobster processing operations in both Canada and the US.”
Premium Brands effectively has another three years to make good on its five-year goal to achieve C$10bn in revenue in fiscal 2027 and C$1bn in adjusted EBITDA.
The outlook for EBITDA in the new financial year was set at C$680-700m after increasing 6.2% to C$593.7m in the 12 months through December.
Meanwhile, adjusted EPS dipped 1.2% last year to C$3.98. No guidance was issued for that metric for fiscal 2025.
