NEW
BRAND
category
GROWTH
CHAIRMAN’S
STATEMENT
Erhard Schoewel
Chairman
March 2014
Our leadership in frozen
should enable us to
redefine the category
as a whole. Doing so
will create a huge
opportunity for Iglo
PERFORMANCE DURING 2013
Recent years have been challenging for the branded
frozen food category in Europe. Macro-economic
conditions are reducing the amount that consumers
have available to spend on food, and the advance
of discount retailers and own-label frozen brands
is shifting the competitive landscape.
2013 performance has fallen short of expectations with the highly
challenging economic situation in Europe impacting our top-line and
profitability. The most significant impact was on our business in Italy,
where companies across the FMCG sector have experienced sales
declines as consumers trade down and private labels bring increased
competitive pressure. In Germany, top-line performance has remained
stable although the growth of the discounter channel in the market
has resulted in pressure on trade spend and margin. In the UK, whilst
having experienced a decline in sales, we have maintained a stable
market position and driven Gross Margin expansion through cost
saving realisation, despite the increased competitive pressures.
08 I G LO F O O D S H O L D I N G S L I M IT E D
BUSINESS OVERVIEW
In times such as these, a category leader such as Iglo has to ride out the
difficult conditions as profitably as possible and use industry leadership
to change the game.
THE OPPORTUNITY FOR IGLO
Frozen food may enjoy 90% penetration in European households, but
since frozen food itself only constitutes 10% of what Europeans eat, our
“share of plate” is far lower than it should be. Our ambition is to change this.
Consumers need great tasting, nutritious food that is responsibly sourced,
minimises waste and enables better meal times. Frozen food is particularly
well placed to deliver against these needs. Far from constraining our
capacity for growth, our leadership in frozen should enable us to redefine
the category as a whole. Doing so will create a huge opportunity for Iglo.
INTRODUCING ELIO LEONI SCETI
It gives me great pleasure to introduce Elio Leoni Sceti to you as the new CEO
of Iglo Group. Elio joined us in May, bringing with him 20 years’ experience
in the FMCG and media sectors, including Reckitt Benckiser and P&G.
He has also brought with him a passion for innovation and re-invention
that will be a powerful asset when it comes to leading the expansion of
our category over the next few years. Following Elio’s arrival, we initiated
a comprehensive review of our strategy that confirmed our key strengths
within our category but also highlighted the opportunity that exists in taking
a broader view of the role that we play in eating occasions. Our leadership
team has responded to the findings of this review with great energy.
I would also like to welcome Daniel Pagnoni who joined as Managing
Director, Findus Italy in March 2013. Daniel joined us from SC Johnson
where he was Vice President and South Zone Director, Europe. He has
a wealth of leadership experience in consumer goods, including in a
number of senior roles at Reckitt Benckiser.
The success of our new strategy will reinforce Iglo’s existing strengths:
our commitment to quality and transparency in our supply chain,
epitomised by our Forever Food Together CSR programme, the trust
that our brands have established with consumers across all of our
markets, the quality of our relationships with our customers and the
passion of our people. Assets such as these, coupled with our market
leadership position, ensure that nobody is better positioned to lead a
reinvention of the frozen food category.
RE-SETTING OUR DEBT COVENANTS
Despite being able to operate within our existing debt arrangements,
we decided to take advantage of favourable debt markets towards
the end of 2013 to re-set one of our financial covenants. This removes
any constraints on the execution of our strategy for the business. At
5x EBITDA we continue to have a healthy debt to EBITDA ratio. Our
business remains strongly cash generative and net debt was reduced by
€115 million during 2013.
OUTLOOK FOR 2014
We will see the results of our strategy and re-organisation into the
market throughout 2014: a new central marketing message building
on Better Meals Together communicated through a broader range of
media channels to reach the full range of food providers, and innovative
product launches that expand our category and challenge expectations
around what frozen food is for. I look forward to sharing the results of
our approach with you in next year’s report.
Annual Report & Financial Statements 2014 09
FINANCIAL STATEMENTS
This report explains the strategy we have adopted for taking advantage
of this opportunity – and describes the significant progress that we
have made during 2013.
OUR NEW BRAND PROPOSITION
Better Meals Together is our new proposition for Iglo. It reflects
consumers’ own focus on meal occasions, rather than ingredients, and
supports our strategy for winning a greater share of the plate, rather
than simply a greater share of frozen food purchases. During 2013, we
have completed the process of organising our key business functions
around different meal occasion categories, aligning our efforts with the
way that consumers think and feel about food. We have centralised
these business functions across the Group, enabling all employees to
focus on the roles they are expert in, developing the talent that we
already have and adding new expertise where necessary.
GOVERNANCE
Like many food companies we also had to deal with the reputational
impact of the horsemeat scandal that broke across most European
food markets in January 2013. Our response to this was pro-active, open
and transparent, and was appreciated by retailers and consumers alike.