Hain Celestial grows natural brands in Europe

29-Aug-2017 - Last updated on 30-Aug-2017 at 14:41 GMT

Related tags Hain celestial Whole foods

Hain Celestial, the US-based natural and organic food manufacturer, insisted that it sees “tremendous opportunities” for the natural and organic food sector as it grows its business in Europe.

Hain revealed that sales increased to €144.9m in the region during fiscal 2017, a jump of 12%. Revenue increased 14% in Europe on a constant currency basis. In particular, Hain said growth was supported by gains from its organic food brand Lima across the continent.

Currency exchange hit Hain’s sales in the UK, which it calls out as a stand-alone operating unit. Revenue totalled €644.7m ($768.3m) in the country, down 1%. However, on a constant currency basis and excluding the impact of M&A, UK sales were up 6%. Including the impact of acquisitions but stripping out forex, UK sales were up 13%, CEO and founder Irwin Simon noted.

In the UK, Hain Celestial flagged "strong brand sales" across brand including Tilda, Ella's Kitchen, Hartley's, Linda McCartney's, New Covent Garden Soup Co. and Sun-Pat.

Tapping demand for natural, organic

Speaking to analysts during a conference call, Simon said the maker of Joya soy-based products is “well positioned” in some of the “most exciting and fastest growing product categories” around the world.

“We believe the tailwind is driving organic and natural foods growth should only get stronger…. There is a continuing shift occurring away from conventional CPG brands to organic natural and better-for-you products, which is exactly where Hain Celestial is positioned today,” he suggested.

In order to capitalise on this demand for “authentic high-quality mission driven brands” Hain is leveraging its R&D capabilities. “We continue to be the first mover in on-trend categories with robust product innovation; for example, we introduced over 200 new products in fiscal year 2017, which many of them are gaining attraction today,” Simon claimed.

On a group-wide basis, including Hain’s operations in the US, net sales were $2.9bn (€2.4bn), a 1% decrease from the prior year. At constant rates, net sales increased by 2%.

“We also know our next phase of value creation will not be won by relying on the past. We must continue to evolve to meet the needs of our consumers and realities of this operating environment,” Simon noted.

Saving targets and investment plans

Part of this “next phase” of development includes Hain Celestial’s drive to strengthen margins.

The company revealed that its profitability was placed under pressure during 2016/17. Adjusted EBITDA was $275m (€231m), or 9.7% of net sales, compared to $379m (€318m) with a margin of 13.1% in the prior year.

However, Hain Celestial expects to lift profitability over the next three years. Under its Project Terra cost savings program, Hain said it aims to deliver $350m (€294m) in savings by 2020.

This will be achieved by taking the complexity out of its global organisation, which currently has an operating structure that reflects Hain’s acquisitive approach to international expansion. In 2018, the company plans to deliver $100m (€84m) in savings from its global businesses.

Hain said that this cost reduction will provide it with the “fuel” to reinvest in its brands, with a focus on core platforms including Better-For-You-Baby, Better-For-You-Pantry and Better-For-You-Snacking.

While Hain could also invest in future M&A, Simon said the group’s primary investment focus will be on growing its core business. “M&A and portfolio change will continue to be a part of our strategy. But going forward, our primary focus will be driving attractive base business growth in today’s highly dynamic environment.”