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Nomad Foods is Buying Findus Switzerland for €110 Million in Cash

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Nomad Foods has entered into an agreement to acquire Findus Switzerland from Froneri International Ltd., as well as certain intellectual property from an affiliate of Nestlé S.A. for approximately €110 million on a debt-free, cash-free basis. The purchase price is expected to be funded through cash on hand, and the transaction is likely to be completed in the beginning of 2021.

Findus is the leading frozen food brand in Switzerland with a portfolio of value added frozen products highly complementary to existing Nomad Foods products across categories including fish, vegetables and ready meals. The acquisition will expand Feltham, England-headquartered Nomad Foods’ geographic reach into Switzerland, providing a natural extension for its other Findus offerings as well as Birds Eye and Iglo brand products, pointed out CEO Stéfan Descheemaeker.

The transaction will unify Nomad Foods’ ownership of the iconic Findus brand across Europe, where it already operates under the Findus banner in Italy, France, Spain, Sweden, Norway, Finland and Denmark.

Commenting on the deal, Descheemaeker stated: “We are thrilled with the acquisition of Findus Switzerland, a brand and market which closely complement our existing portfolio. By unifying the Findus brand under Nomad Foods’ ownership and extending our geographic reach, we believe we have multiple levers for long-term value creation. We look forward to welcoming the Findus Switzerland team into our organization.”

Noam Gottesman, Nomad Foods’ co-chairman and founder, commented: “The acquisition reinforces our strategy of growing through a combination of organic growth and complementary, accretive M&A. We have long admired this business, and we are excited to build on its success by leveraging the resources, capabilities and scale of our organization.”

Nomad Posts Positive Financial Results

Meanwhile, on November 5 Nomad Foods reported financial results for the three- and nine-month periods ended September 30, 2020.  Key operating highlights and financial performance for the third quarter of 2020, when compared to the third quarter 2019, include:

  • Reported revenue increased 6.7% to €576 million
    • Organic revenue growth of 5.4%
    • Reported Profit for the period of €56 million
    • Adjusted EBITDA increased 13% to €109 million
    • Adjusted EPS increased 20% to €0.30

Comments from Top Management

“Consumer demand remained elevated during the third quarter, and our performance continues to be led by our branded retail business. Frozen food is one of the fastest growing categories in Europe, which is a testament to the resilience of the category even as offices, schools and restaurants gradually reopen. As the duration of this pandemic (Covid-19, caused by the SARS-CoV-2 virus) extends into its eight month, consumers are recognizing the benefits of our portfolio, forming new habits and repurchasing with greater frequency. We remain agile and prepared for the possibility of another demand spike as the number of new Covid-19 cases rises across Europe and local governments introduce new restrictions. While navigating the pandemic is a top near-term priority, we are equally focused on ensuring sustained growth beyond 2020,” said CEO Descheemaeker.

Co-Chairman and Founder Gottesman added: “Our business continues to perform well throughout the challenges of the COVID-19 pandemic as consumers recognize the value of frozen food and our brands in particular. Our financial results, including strong revenue and Adjusted EPS growth, strengthen our foundation for next year and years to come. Furthermore, year-to-date we have returned nearly $600 million of capital to shareholders – nearly $500 million through a successful tender offer in the third quarter and the balance through programmatic purchases. In doing so, we are optimizing our balance sheet while preserving financial flexibility to pursue our M&A strategy. We enter the fourth quarter with strong momentum, and we remain excited by Nomad’s near and long-term growth prospects.”

Q3 2020 Results Compared to Q3 2019

  • Revenue increased 6.7% to €576 million. Organic revenue growth of 5.4% was comprised of 4.2% growth in volume/mix and 1.2% increase in price.
    • Gross profit rose 10% to €175 million. Gross margin advanced 90 basis points to 30.4% as pricing, favorable mix and fixed cost leverage offset cost of goods inflation.
    • Adjusted operating expenses increased 4% to €83 million as growth in indirect expenses was partially offset by a modest decline in advertising and promotion.
    • Adjusted EBITDA increased 13% to €109 million and Adjusted Profit after tax rose 20% to €59 million due to the aforementioned factors.
    • Adjusted EPS increased 20% to €0.30, which includes the impact of a lower share count resulting from the repurchase of ordinary shares in the tender offer and otherwise during 2020. Reported EPS increased 45% to €0.29.

First Nine Months of 2020 Compared to Same Period in 2019

  • Increased 9.6% to €1,858 million. Organic revenue growth of 8.4% was comprised of 6.7% growth in volume/mix and 1.7% increase in price.
    • Gross profit rose 9% to €555 million. Gross margin declined 20 basis points to 29.9%, as pricing, promotional efficiencies and mix were more than offset by cost of goods inflation.
    • Adjusted operating expenses increased 6% to €260 million as double digit growth in indirect expenses was partially offset by a decline in advertising and promotion.
    • Adjusted EBITDA increased 10% to €347 million and Adjusted Profit after tax rose 13% to €195 million due to the aforementioned factors.
    • Adjusted EPS increased 8% to €0.98 and Reported EPS increased 47% to €0.84.

2020 Guidance

The company is reiterating its 2020 Adjusted EBITDA guidance which is expected to be in excess of €460 million.  Adjusted EPS is now forecast to exceed €1.31 EPS, reflecting a lower share count assumption upon the completion of the tender offer in September 2020. Full year guidance continues to assume organic revenue growth at a high-single digit percentage range.