Bonduelle is looking to buy the Russian operations of fellow French food company CECAB.
The vegetable processor is in “exclusive discussions” with CECAB to buy the co-operative’s D’Aucy and Globus brands in Russia and the CIS.
Bonduelle said it supplies markets in the region through plants in Hungary and Russia. It said the Russian facility, in Novotitarovskaia, handles 60% of its production for the region but is operating at full capacity.
An acquisition would see Bonduelle “ramp up” production at CECAB’s farm through an increase of the capacity at the co-operative’s plant in Timachevsk.
Bonduelle said there were “obvious synergies” to be gained due to the proximity of the company’s facility with CECAB’s plant, which are both in the south of Russia.
A deal could be finalised by the end of the year but remain subject to clearance from Russia’s competition authorities.
News of the talks came as Bonduelle reported a drop in annual profits. Net profit for the year to the end of June slumped 47.9% to EUR30.4m (US$40.9m).
Operating profit fell 32.3% to EUR68.9m due to restructuring charges and a poor harvest, which pushed up costs and hit supply. Bonduelle also pointed to a fall in prices of own-label canned vegetables.
Turnover climbed 10.7% to EUR1.73bn thanks in part to a full 12 months contribution from mushroom producer France Champignon, which Bonduelle acquired last year. Like-for-like sales increased 0.6%.
In the current financial year, Bonduelle expects internal sales to increase by 3-5% and for operating profit to jump 40% to EUR95-100m.