Best bits: Carrefour, Premier Foods CEOs press on - but questions remain
Plassat (l) and Clarke (r) trying to refocus Carrefour and Premier
The work the chief executives of Carrefour and Premier Foods - two companies with a lot on their plates - has been welcomed by industry watchers but, writes Dean Best, there are questions hanging over both companies, which had lost their way in recent years.
Two CEOs either side of the English Channel are cracking on with two of the more unenviable tasks in the sector - turning around French retail giant Carrefour and revitalising UK manufacturer Premier Foods.
Last week, more deal-making was announced at both companies as their chief executives sought to bring more clarity to businesses that had, in different ways, lost their way in recent years.
At Carrefour, Georges Plassat signed off the latest disposal from the world's second-largest retailer. It agreed to offload its stores in Malaysia to Japanese retailer Aeon, the third sale since Plassat took charge in May. Since then, Carrefour has sold its interest in its Greek operations to its local franchisee and, notably, sold its stores in Colombia to Chile's Cencosud for a not insignificant EUR2bn.
The disposals are part of Plassat's plans for Carrefour to focus on markets where it has or can carve out a "strong" position. The retailer's operations in markets like Poland, Indonesia and Turkey are under review.
And even in markets where Carrefour has a relatively strong position, such as Brazil, Plassat seems to be looking at his options. There were reports last week Carrefour could list Brazilian wholesale arm Atacadão.
However, it is not just one-way traffic. Bolt-on acquisitions are also being made. In June, Carrefour bought over 100 stores in Argentina and, last week, snapped up a dozen outlets in Belgium.
Plassat comes across as his own man (anyone who witnessed or tuned into Carrefour's half-year results presentation would agree with that) and he seems to have done more to reshape Carrefour in six months than predecessor Lars Olofsson managed in three years.
That said, analysts still want to hear more about Plassat's financial targets for Carrefour and, of course, perhaps his biggest challenge is in France, where the company recently claimed to see signs of improvement but faces fierce competition from the likes of Leclerc and Auchan.
Revamping Carrefour's merchandise and ensuring its price positioning is right are two elements Plassat has identified as crucial. However, doing this in a tough economic environment, particularly in Europe, will be tough, especially when competition is, to some extent, as fierce as it has ever been.
In the UK last week, Premier Foods announced its latest disposal. Another household brand, Branston pickle, is to be sold as CEO Michael Clarke looks to reduce Premier's debt pile and focus on a select number of 'power brands'.
The GBP42m sale of Branston will, when completed, mean Premier has exceeded its target of bringing in GBP330m from disposals by June 2014.
The process of refocusing Premier was started under previous CEO Robert Schofield but it has gained fresh impetus since ex-Kraft and Coke exec Clarke took charge last year.
The sale of Branston to condiments firm Mizkan is the second Clarke has struck with the Japanese company alone; this summer, he agreed to sell brands including Sarson's vinegar to Mizkan.
For its part, Mizkan plans to focus on innovation to drive Branston's growth, as the head of the Japanese group's European business told just-food last week.
Could the Branston sale be the last at Premier? There are concerns in the City about the company's gearing, its pension deficit and the sustainable growth Premier can generate.
Even one of its so-called power brands, Hovis, has been touted as a candidate for disposal. Premier has refused to be drawn on claims it has hired Goldman Sachs to test what interest there could be in its bread business.
There are no easy options for Premier and Hovis. A sale to one of its two main rivals - Associated British Foods and Warburtons - would lead to competition concerns, while why an overseas buyer or private-equity firm would want to buy into such a competitive market is unclear. Moreover, any changes to Premier's Hovis manufacturing network could also pose problems.
"In a sale scenario, there would be major competition issues around any consolidation of the UK bread industry, while the intent and/or financing capacity of any tertiary UK baking players, overseas baking players or private equity is far from certain," Investec analyst Martin Deboo said last week.
"In any scenario short of a sale, Premier may find themselves in a bind between the attraction of rationalising their baking capacity, or making other changes to the supply chain, and maintaining national coverage and competitive service levels to the big retailers."
This week, ABF publishes its annual results and, while it would be unlikely to comment directly on a competitor, it will be interesting to hear what the company says about its own UK bread business.
Majid Al Futtaim, Carrefour's franchisee in the Middle East and north Africa, is reported to be in advanced talks to buy two Egyptian retail chains....
- Why "simple" and "real" will be industry buzzwords
- Nestle's 2014 results: 10 Things to Learn
- On the money: Can Danone grow fresh dairy?
- Why US Dietary Guidelines report deserves praise
- Maspex: M&A opportunities in eastern Europe
- Kerry Group CEO expects more M&A in 2015
- Gruma FY earnings surge as margins improve
- Kerry sales, earnings rise but food weighs
- ABF continues to expect profit drop
- Irish Dairy Board to change name to Ornua