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Nomad CEO expects whitefish price pressure into 2020

Frozen fish processors, including private-label operators, have been feeling the strain of higher cod and pollock prices.

Nomad Foods said it expects to see further price inflation in 2020, meaning it must raise its game to thwart the growing threat from private-label brands in the frozen fish category.

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Frozen fish processors, including private-label operators, have been under pressure from higher cod and pollock prices, which has made life difficult for Nomad rivals such as Deutsche See in Germany.

"It's a never ending story. We always have to find the balance between price, volume, market share and margin," Nomad CEO Stefan Descheemaeker said during a call with analysts, adding that the key word is "agility" for his company to be able to adapt to changing situations.

"There will be inflation, we have been planning for that," Nomad CFO Samy Zekhout added. "But we are going to have to make sure we continue to grow our business, accelerate our growth and create value through that."

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Descheemaeker said he welcomes competition from other brands because it forces his company to raise its game.

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Besides higher fish prices, processors operating in the United Kingdom have to deal with fluctuating currencies, which tend to rise and fall on Brexit-related news.

Descheemaeker confirmed that Nomad has a hedging strategy in place to counter volatility linked to the United Kingdom's departure from the European Union, which was recently delayed for a third time until Jan. 31.

"We spend a lot of time in Brexit meetings," he said.

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Biding time on acquisitions

With €700 million ($775 million) in cash set aside for acquisitions at the end of the third quarter, following a March capital raising, Nomad continues to evaluate targets.

Although Descheemaeker declined to say what size deal, or deals, Nomad has in its sights, he said country, category and channel are key factors in executives' thinking, while the cross border implications of Brexit would not dissuade the company for moving for a UK operation.

"We are not expecting to sign anything right now," he said.

The comments come as Nomad posted a 14 percent increase in the third quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

It marked the company's eleventh consecutive quarter of organic growth, helped in part by sales of fish fingers.

Nomad, which owns Birds Eye, Iglo and Findus brands, posted adjusted EBITDA in the third quarter of €96 million ($106.4 million), taking into account IFRS 16, a new lease accounting standard that requires certain operating leases to be capitalized on the balance sheet.

Revenue increased by just under 2 percent to €540 million ($598.4 million) compared to last year, according to third quarter results.

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