LONDON With sales in its core business growing after six years of declines and 600 million euros ($655 million) at its disposal, Nomad Foods (NOMD.N) is finally in a good position to make acquisitions, its chief executive told Reuters on Friday.
The company was formed in 2014 as a vehicle to consolidate Europe's slow-growth 25 billion euro frozen food market. Its anchor deal, Iglo, closed in June 2015 and the follow-on acquisition of Findus Group's European business closed in November 2015.
Since then, the group has focused on turning around declining sales of its brands, which include Iglo, Birds Eye and Findus.
"The first two years were fully dedicated to making sure our fundamentals were sound. We're starting to get there," CEO Stefan Descheemaeker said in an interview. "That was the key."
Nomad's sales trends have improved sequentially, helped by its focus on "must-win battles" and Descheemaeker said like-for-like sales in the first quarter had finally grown. He declined to quantify the growth, as Nomad will report first-quarter results on May 25.
The overall European frozen food market has grown by about 1 percent for the past five years.
"When you're getting out of a turnaround, it's initially difficult to see where you're going to be. So we're starting to discover this interesting world of positive growth," said Descheemaeker, who used to oversee mergers and acquisitions at the predecessor to brewer Anheuser-Busch InBev (ABI.BR).
He reiterated the view that like-for-like sales will be positive for the full year.
Nomad, formed by serial dealmakers Martin Franklin and Noam Gottesman, is Europe's leading seller of frozen fish, vegetables, poultry and prepared meals.
Its first priority for acquisitions is within European frozen food, where there remain pockets of room to grow, such as frozen poultry in Norway, Sweden and Finland. But Descheemaeker pointed out that there are other areas of frozen food, such as pizza and desserts.
After that, the company might look at European non-frozen foods or non-European foods.
Descheemaeker, who also served as CFO of one of the predecessor companies of Ahold Delhaize (AD.AS), said Nomad could afford mid-sized acquisitions of up to 600 million euros.
"For the categories we're in, that's fine. We don't need more than that," Descheemaeker said.
"When you want to venture outside the mid-sized deals then you will need something bigger, you will have to go to your shareholders. But we're not there yet."
He said Nomad was not interested in buying Picard, the French frozen food retailer that could be sold by Lion Capital and Aryzta (ARYN.S) and that he could not comment on the food business being sold by Reckitt Benckiser (RB.L), which sources estimate could be worth several billion pounds.
(Editing by David Goodman/Keith Weir)