Premium Brands Holdings, the mainly North America centric food business, has struck new supply deals in Asia, potentially adding C$100m ($73.2m) to sales.
The Richmond, Canada-based company said the “new opportunities” will benefit its sandwich, bakery and protein segments sitting within its largest business division – the branded Specialty Foods Group.
“For the first time in a long time, we've gained new listings in Asia,” president and CEO George Paleologou said as he presented third-quarter results.
“We see tremendous potential with regards to growing in that market. We’ve probably got about 50 SKUs that I think we should be able to list in the Asian markets, particularly in Japan, South Korea and China.
“I think at this point, internally, we are looking at it as a probably $100m opportunity in the shorter term.”
Premium Brands, which has a diversified portfolio ranging from bread to pastries, meat, sushi and seafood, reported a 1.3% increase in third-quarter group revenue to C$1.64bn.
Specialty Foods generated C$1.06bn in sales, up 4.9% in the period to 30 September. The company’s other division, the distribution and wholesale business mainly supplying foodservice, Premium Food Distribution (PDF), posted C$586.9m. That represented a 4.6% decline, due to a “challenging lobster market”.
Premium Brands, which has largely built up its business through M&A, struck a seafood deal for Menu-Mer in Quebec after the reporting period end through the PFD business unit.
Not much was given away about the completed transaction in Premium Brands’ results commentary. The acquired company’s website says it “specialises in the processing and sale of fish and seafood”.
CFO William Kalutycz suggested Menu-Mer has about C$28m in sales as he discussed the results with analysts yesterday (14 November).
Announcing the previous set of quarterly results in August, CEO Paleologou said the acquisitive hungry Premium Brands was back on the M&A trail after navigating through “black swan events like extreme inflation and supply chain issues and labour shortages”.
Asked yesterday about the risk of blowing the company’s cash on M&A and depleting the balance sheet, Paleologou said: “We're very cautious. We're involved in many friendly discussions with regards to companies joining Premium Brands, to the extent that the synergies are there and the opportunities for growth are there.
"We may do those deals and probably use our shares as a currency, if it makes sense from an IRR perspective.”
Kalutycz explained much of the company’s expansion focus has been on internal or organic growth, with five capital expenditure projects lined up, three of which are expected to be up and running in the fourth quarter.
“We expect to see significant acceleration in our organic growth rate as five major capacity expansion projects get commissioned over the next several quarters, all of which are focused on supporting our very successful US-based growth initiatives in premium frozen sandwiches, cooked protein, meat snacks and artisan baked goods,” Paleologou said in the results commentary.
