The Feltham, UK headquartered Iglo Group, the leading marketer of branded frozen food products in Europe’s retail market through its Iglo, Birds Eye and Findus labels, has announced that net sales rose 2.7% in the third quarter of 2014 compared to the same period the year before. Year-on-year EBITA increased 9.7%, advancing 6.1% on a constant currency basis. While gross margin increased slightly, the overall result was flat in constant currency terms.
“Tough market conditions continue to impact the sector, with consumer spending under pressure across all European markets. This has resulted in the defined frozen category declining by 0.4% in the third quarter,” said CEO Elio Leoni Sceti. “Against this background, Iglo has delivered value share growth in eight out of 11 markets. We have invested in our new campaign to support not only the core, but also to drive the launch of our new innovations.”
While believing that the fourth quarter market will remain challenging, Iglo Group CEO Elio Leoni Sceti says: “We are confident that our Better Meals Together strategy will drive consumer interest in the frozen food category as we invest in the strength of our brand.”He continued: “Several new product launches in the year to date have met with a positive consumer response and delivered strong performance in their respective markets – in particular the Inspirations platform in the UK and Italian markets. Q3 also saw the launch of the new Steamfresh platform in the UK and Austria, as well as the introduction of a new brand and packaging design across our four biggest markets, which will progressively roll out across the remaining markets.”
As the European retail market overall continued to be challenging during the past year, the CEO was pleased to report that the company’s business in Italy has scored 12 successive months of net sales growth to September 2014, as well as growing share in Q3.
“A key factor in the recent performance of our Italian business has been the successful launch of innovative products, which continued to perform strongly in Q3, notably in the Seafood and Pyramid Meals categories,” said Sceti. “In addition, the Inspirations platform launched in Q2 under the Birds Eye brand continued to gain momentum with net sales of the newly launched products under that range of nearly €6 million in Q3 and €13 million in the year to date.”
The key product launch of the quarter has been the new Steamfresh range in the UK and Austrian markets, which combines strong existing lines, including Rice and Vegetable Fusions, with newly launched products, such as pasta-based dishes and vegetable mixes. The Steamfresh assortment, which comes in microwaveable steamer bags, is expected to generate €40 million in retail sales value on a full-year basis in the UK.
Iglo brand products, which include Birds Eye and the Findus label in Italy, cover a wide assortment of frozen foods ranging from fish and vegetable dishes to ready meals and more.“We also introduced a new brand and packaging design across our four biggest markets during the quarter, designed to boost on-shelf impact, product and brand recognition and consumer navigation of the category,” reported the ceo. “The Iglo markets saw the first of the Better Meals Together innovation launches at the end of Q3, as the new strategy progressively rolls out across the business.”
Iglo has continued to invest in the future, most notably in media to support its Better Meals Together strategy and innovation rollout, as well as in marketing capability and research and development capacity. This has been enabled in part by the strong margin performance in the quarter.
Meanwhile, the Group has decided to cease marketing its products in Romania, Slovakia and Turkey, where the frozen category is small in terms of the overall grocery market. According to a press release issued by the company: “Sales to these three countries are considered immaterial to the Group, and so are not expected to have a significant impact on the overall financial performance.”
The UK, Italy, Germany and Austria are the Iglo’s largest markets, accounting for about 85% of annual turnover.
In other news, a charge of €9.9 million has been incurred relating to restructuring costs of operations across the Group, principally at its factories in Germany. This is said to be part of an “ongoing program to create further operational efficiencies.”
Cash generation remains a key management focus. A cash conversion level of 99% over the last 12 months has enabled Iglo to reduce net debt by €92 million year-on-year. In July the Group successfully refinanced its debt through the issuance of new term debt and a bond listed on the Luxemburg Stock Exchange. This is expected to yield annual interest savings of approximately €14 million.
