Nomad Foods eyes acquisitions as profits fall 22.6%

02-Apr-2017 - Last updated on 03-Apr-2017 at 10:46 GMT

Nomad Foods reported a 22.6% drop in profits

Nomad Foods, owner of Birds Eye and Findus, reported a 22.6% fall in profits in its fourth quarter of 2016, but claims to be considering strategic acquisitions in 2017.

Revenue decreased 6.8% to €485.2M in the three months to December 31 2016, compared with the same period in 2015. Adjusted earnings before interest, taxes, depreciation and amortisation also dropped 12.8% to €62.1M, while adjusted earnings per share was down 23.5% to €0.13.

The food manufacturer also reported a 6% fall in revenue to €1.93bn in the 12 months to December 31. Across the full-year, Nomad Foods’s gross profit fell 5.6% to €571M, and earnings per share decreased 4.5% to €0.84.

Nomad Foods blamed its three largest markets for the decline in sales: the UK, Italy and Germany. The weak value of the euro compared to the dollar drove its €33.7M fall in gross profit, combined with Italy’s raw material shortage, it said.

Eyeing potential acquisitions

Nomad Foods eyes acquisitions

“We believe our ability to generate significant cash flow positions us to consider strategic acquisitions in 2017 and beyond”

Stéfan Descheemaeker, Nomad Foods

But, the business was pleased to see the rate of sales decline slowing. It welcomed its “excellent progress” with like-for-like sales and was eyeing potential acquisitions.

Nomad Foods ceo Stéfan Descheemaeker said: “2016 marked an important milestone for Nomad Foods. We made meaningful progress against our objectives: firstly, stabilising sales by progressively slowing the rate of decline in the top line. Secondly, delivering on our synergy commitments from the Findus acquisition, and thirdly, generating strong cash flow to drive consolidation within the global food industry.

“We believe our ability to generate significant cash flow, along with an improving operational foundation, positions us to consider strategic acquisitions in 2017 and beyond. We continue to make excellent progress with like-for-like sales moving into positive territory in [the first quarter of 2017], an encouraging development that we expect will continue throughout 2017."

‘Improving operational foundation’

The firm expected to report growth by the end of 2017, it said.

Nomad Foods co-chairman and founder Noam Gottesman said: “We delivered growth in our core portfolio during [the fourth quarter of] 2016, and will stabilise our top-line during [the first-quarter of] 2017.

“Our strategy is clearly working. We look forward to growth during 2017, as we continue our journey to build a leading, global consumer foods company.”

Meanwhile, Nomad Foods’s falling profit came 18 months after it reported a monumental £392M loss in the six months to June 30 2015. It blamed the loss on the acquisition of frozen food firm Iglo Group. At the time, it had just agreed a £500M deal to buy the European operations of Findus Group.