Bonduelle CFO Gregory Sanson:
Bonduelle "ready for more mergers and acquisitions"
France-based international vegetable supplier Bonduelle this week reported its annual financial results, a year of rising sales and earnings and in which it struck a major acquisition - that of US produce group Ready Pac Foods. Dean Best from just-food.com spoke to Bonduelle CFO Grégory Sanson about why it is ready for more mergers and acquisitions (M&A).
Sanson insists Bonduelle is prepared to strike again, even after moving to buy Ready Pac. M&A, he says, is "part of our business model". Bonduelle is targeting annual turnover of EUR3.5bn (US$4.12bn) by 2025 and sees deal-making as one way to achieve that goal. With the acquisition of Ready Pac, Bonduelle has created five units and each has M&A as part of its own strategy.
"In the roadmap for those business units, external growth is on the agenda," Sanson says. "Because we have such a big acquisition as Ready Pac Foods does not mean we cannot afford from an operational standpoint some acquisitions in the other segments."
The Bonduelle finance chief says the company also has the financial resources to again add to its business through acquisitions. "The other question is financial resources. Thanks to the strong performance we had in terms of capital employed this year, we have available something around EUR150-200m available for further external growth," he explains.
"In this respect, we see a lot of opportunities but we are clearly selective. We want to stick to the ambition we have, to be the worldwide reference in well-living through vegetables products and mainly focused on brands."
Not unexpectedly, Sanson is coy about whether the market could see Bonduelle make another acquisition this year. "There might be some," he says, before adding for emphasis: "It's not because we had Ready Pac Foods that we will not have additional acquisitions this year. We are ready for that, provided that we find the right targets - at the right price, which is another story."
Sanson also gives little away about what and where Bonduelle could look next to acquire but he does give a flavour of the company's thinking. "We are open to consider all categories.
In Europe, considering the market share we have in our three segments, the room for acquisitions is pretty limited but we have clearly identified some big brands - for limited areas but big brands that might be of interest to Bonduelle," he explains. "We are in some countries but not in all technologies. We are really weak I would say in Spain compared to the potential of that market, so that might be a target for us but we do have other targets in Europe."
Bonduelle could also look at adding other businesses to its operations in the US, now its largest single geographic market following the Ready Pac transaction. "The focus clearly is also on the US. That's the very beginning of the story for Bonduelle, not just in the fresh segment but also in the other segments," he says. "We are in canned and frozen but a limited level of canned, [while] in frozen we are in foodservice and in private-label. So they might be areas of future growth for Bonduelle."
And, despite the recent challenges Bonduelle has faced in countries like Brazil and Russia, the company would consider getting out its chequebook in emerging markets. Brazil's economy has struggled in recent years, with two years of recession, though, based on GDP figures at least, that period ended in the second quarter of this year.
Similarly, Russia's economy contracted in 2016, although its numbers for the second quarter of 2017 showed also GDP growth, even if growth in wages remains muted. Bonduelle has a significant share of Russia's canned vegetables category and Sanson describes the market as "one of the most profitable areas we have in our portfolio".
He says: "For sure we face a pretty challenging environment [in emerging markets] but we are thinking of the next 20 years. Some emerging countries in eastern Europe might be of interest. In South America, we are only in Brazil for the time being but there are many countries in South America where we are not present."
"In Russia, we have a 50% market share but it's only in canned. We are not in frozen. One day or another we will be in frozen in Russia. You see, there are many areas and many segments where we can continue to grow. Asia is not priority number one on the agenda due to the structure of consumption, mainly devoted to fresh vegetables and not processed vegetables."
It has been nine years since Sanson was promoted from a divisional role to CFO and he argues Bonduelle is now a "more focused" business. "We have clearly defined what we want to do with this ambition of being the worldwide leader of well-living through vegetable products. The playground now is clear, our focus is clear on brands, brands and brands first. And, thanks to our focus on return on capital employed, we do have the resources to deliver the growth and profitability we expect."
Publication date: 10/5/2017
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