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New Princes Group: new 2.8 billion euro food giant

Newlat Food presents industrial plan after acquisition in the UK

A global operating network of 31 factories and approximately 8,800 employees and 30 brands is expected.

After the announcement last May 27th on the 100% acquisition of Princes, the historic English food group until now controlled by the Japanese conglomerate Mitsubishi (read EFA News), this morning Newlat Food presents the Group's industrial plan to 2030. New Princes Group, this is the new name of the group, it will have a turnover of 2.8 billion euros, a global operating network of 31 factories and approximately 8,800 employees and 30 brands. Among the Princes plants, the one in Foggia is particularly important for the industrial processing of tomatoes.

"The Group will double the offering of product categories to its customers, becoming one of the leading multi-brand and multi-product companies in the food sector in Europe", reads a note from Newlat Food. “The closing of the transaction, subject to obtaining antitrust clearances from the relevant authorities and consultation with the European and Dutch works council within the Princes Group, is expected by the end of July 2024.”

The 2030 industrial plan of the new group envisages organic growth in turnover with a CAGR of 3% between 2024 and 2030, reaching euro 3.34 billion in 2030. Further contributions to growth may come from the commercial synergies between Princes and Newlat Food, while the target of 5 billion euros will be linked to the contribution made by external growth. In this conservative scenario, profitability is expected to increase by 270 bps, reaching an Ebitda of 317 million euros in 2030 and a margin of 9.5% driven by commercial synergies, the improvement of the mix of products offered, a greater contribution from proprietary brands and operating leverage. Cost and integration synergies are estimated at €36 million, while further commercial synergies could lead to margin growth of over 10% by 2030.

Net profit is expected to exceed Euro 100 million by 2030, while already for the current financial year, a pro-forma profit in 2024 (Princes consolidated for 12 months) is expected to exceed Euro 300 million due to the bad will of Euro 288 millions. Given this extraordinary item and in consideration of the shareholder loan of Euro 200 million, the group's net equity is expected to exceed Euro 700 million. The quality of the results will be evident thanks to the cash generation. The group expects a level of Free Cash Flow equal to Euro 172 million in 2030, the result of a more efficient management of Working Capital, an optimization of the operational structure and consequent reduction of Capex, as well as the progressive reduction of related interest costs to the virtuous triangle of: 1) Ebitda improving; 2) reduction of the average spread; iii) progressive reduction of the average amount of debt. Management expects to rapidly complete the deleveraging process, targeting a net debt/Ebitda ratio of less than 1x by the end of 2026. Such financial flexibility will allow New Princes Group to look to further strategic M&A activity to achieve 5 billion euros in revenues in 2030.

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EFA News - European Food Agency