Premium Brands Holdings, a primarily North America-focused food enterprise, has recently secured fresh supply agreements in Asia, potentially contributing an additional C$100 million ($73.2 million) to its sales.
The company, headquartered in Richmond, Canada, stated that the “new opportunities” will positively impact its sandwich, bakery, and protein segments, which are part of 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, boasting a varied product lineup encompassing bread, pastries, meat, sushi, and seafood, announced a 1.3% rise in group revenue for the third quarter, reaching C$1.64 billion.
Specialty Foods recorded a sales figure of C$1.06 billion, reflecting a 4.9% increase by the end of September. Meanwhile, the distribution and wholesale segment, primarily serving the foodservice industry through Premium Food Distribution (PDF), reported sales of C$586.9 million, marking a 4.6% decrease attributed to challenges in the lobster market.
Premium Brands, primarily expanding its business through mergers and acquisitions, finalized a seafood agreement for Menu-Mer in Quebec following the conclusion of the reporting period via the PFD business unit.
Not much information was revealed in Premium Brands’ results commentary regarding the completed transaction. However, the acquired company’s website indicates a specialization in the processing and sale of fish and seafood.
During discussions with analysts on November 14th, CFO William Kalutycz indicated that Menu-Mer boasts approximately C$28 million in sales.
In the announcement of the prior quarterly results in August, CEO Paleologou stated that the acquisition-driven Premium Brands, having successfully navigated through challenges such as extreme inflation, supply chain issues, and labor shortages, was once again actively pursuing mergers and acquisitions.
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.
