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August 20, 2012 7:01 am
Iglo Group was losing market share in the first half of the year in continental Europe, at the same time as owner Permira’s abortive attempt to sell the frozen fish finger maker fell apart, results released on Monday show.
Iglo’s underlying sales were broadly flat on a like-for-like basis, although currency fluctuations and extra trading days boosted reported group net revenues 3.5 per cent year-on-year.
Martin Glenn, chief executive, said Iglo had ceded share to private label manufacturers in Italy, where it bought Unilever’s frozen food operations in 2010.
Iglo also lost out in Germany, the Netherlands and Belgium where cash-strapped shoppers are increasingly turning to discount stores, where Iglo’s frozen fish, vegetables and ready meals are less widely available.
In the UK, which accounts for one-third of Iglo’s sales, the company increased its market share. Frozen foods are also growing at a faster rate in the UK than other foodstuffs. According to Nielsen data, total UK supermarket sales increased 2.9 per cent, while the overall £4.5bn supermarket sales of frozen food are growing at 3.1 per cent.
Frozen food has been a beneficiary of the austerity era. It is generally cheaper than chilled or fresh food, and entails less waste – a key concern for households striving to eke out dwindling budgets.
Mike Watkins, head of retail and business insight at Nielsen, a global information and measurement company, pointed to the move by Tesco, the UK’s biggest retailer, to extend its doubling of Clubcard points for spending to frozen foods, as evidence of the importance now being given to the category.
“With frozen food you don’t waste it, it’s value for money, and there are some good brands as well as strong private label. So it ticks all these consumer boxes,” he said.
Iglo saw earnings before interest, tax, depreciation and amortisation rise 12.8 per cent to €180.3m in the first six months of the year. Mr Glenn said the company had invested record amounts of capital expenditure in absolute terms and also increased advertising.
However, he sounded a cautious note on the outlook with a continuing “steady squeeze” on households’ disposable income. “Looking forward we are assuming the retail environment is going to remain tough and get tougher in Europe,” he said.
That followed the collapse of sale talks with rival investors including Blackstone and BC Partners. Buyers were looking at rolling up other assets in the frozen food sector.
The sale was expected to raise about €2.5bn but offers fell short. Permira puts the company’s enterprise value at between €2.8bn and €3bn.
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