Steve Francis

Steve Francis, CEO of Patisserie Valerie

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Patisserie Valerie has been bought out of administration by the new management team.

A deal was struck with administrators KPMG in the early hours of this morning, backed by Causeway, an Irish private equity firm.

The new management team is led by CEO Steve Francis. The former Tulip boss, a turnaround expert was brought in by chairman Luke Johnson in November after a £40m hole was discovered in the former AIM-listed chain’s finances.

Francis has set about building a new management team since the chain’s shares were suspended in October following the discovery of fraud. CFO Nick Perrin was initially recruited on an interim basis, Jose Peralta was brought in as director of food production and supply, with former Starbucks executive Rhys Iley appointed commercial director to run Patisserie Valerie’s front of house operations later that month.

In January Patisserie Valerie went administration with the loss of almost 1,000 jobs, via a CVA, but the new management team has been running the remaining 120-odd stores as a going concern.

The Midlands-based Philpotts sandwich business and the upmarket Baker & Spice London bistro chain will be sold separately with a number of offers on the table for both, The Grocer understands.

More details as they break here.

Morning update

Nestlé (NESN) has announced it is exploring sale options for its Herta charcuterie business to focus on higher growth plant-based foods as it posted full year organic sales growth of 3%.

The Swiss food giant said it will “explore strategic options” for the Herta brand, including a potential sale.

The strategic review covers Herta charcuterie (cold cuts and meat-based products) in France, Germany, Belgium, Luxembourg, the United Kingdom and Ireland, with 2018 sales of about CHF680m.

Nestlé said the decision underscores its increased focus on high-growth plant-based offerings as consumers look at different ways to balance their protein intake and lower the environmental footprint of their diets.

The strategic review of the Herta charcuterie business is expected to be completed by the end of 2019.

Meanwhile, organic growthof 3% in 2018 was driven by real internal growth of 2.5% and pricing growth of 0.5%.

Total sales were up 2.1% to CHF91.4bn, with acqusitions helping grow sales by 0.7 percentage points and foreign exchange rates reducing growth by 1.6 percentage points.

The acquisitions of the Starbucks fmcg coffee license and Atrium Innovations, more than offset divestments, mainly in US confectionery

Organic growth was driven by stronger momentum in the US and China, Nestlé’s two largest markets, while there was also a step up in organic growth for the infant nutrition and confectionery businesses. Petcare, coffee and Nestlé Health Science also continued to make “significant contributions” with “sustained high growth”.

Organic growth for the group was 1.6% in developed markets and 4.9% in emerging markets.

Underlying trading operating profit increased by 5.1% to CHF 15.5bn.

Its underlying trading operating profit rose 50 basis points to 17.0%, with its trading operating profit margin up by 30 basis points to 15.1%, reflecting higher restructuring-related expenses.

Overall margin expansion was supported by operational efficiencies, structural cost reductions and improved mix, which more than offset higher distribution expenses.

Mark Schneider, Nestlé CEO, said: “We are pleased with our progress in 2018. All financial performance metrics improved significantly and we saw revived growth in our two largest markets, the United States and China, as well as in our infant nutrition business. Nestlé keeps investing in future growth and – at the same time – has increased the amount of cash returned to shareholders through our dividend and share buyback program.

“We made significant progress with our portfolio transformation and sharpened our group’s strategic focus, strengthening key growth categories and geographies in the process.

“We are on our way to meeting our 2020 targets and positioning Nestlé for sustained and sustainable growth in the years beyond.”

Nestlé said it expected continued improvement in organic sales growth and underlying trading operating profit margin in 2019. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Elsewhere, strong revenue growth has driven margin expansion at European Coke bottler Coca-Cola HBC (CCH).

Net sales revenues up were 6% on an FX-neutral basis in 2018, which represented the second year of FX-neutral revenue growth above its 4-5% target range.

Reported revenue grew 2.1% to €6.6bn, while FX-neutral revenue per case increased by 1.7% with growth in all segments and an acceleration in the fourth quarter.

Price increases as well as category and package mix contributed to the growth year on year.

Volume growth of 4.2% was broad based across all categories and segments for the year, with improved in its established markets segment in the fourth quarter and particularly strong volumes for the full year in the developing segment.

Volumes were up 1% in the established segment, up 8.8% in the developing segment and up 4.3% in the emerging segment.

Overall volume growth of 4.2% in the year was an acceleration from the 2.2% growth rate in the prior year. CCH saw a strong performance across both sparkling (including energy) and stills, which grew 4.7% and 3.0%, respectively.

Comparable EBIT was up 9.6% to €680.7m, with comparable EBIT margin up 70 basis points to 10.2%.

Comparable net profit of €480.4m and comparable earnings per share of €1.306 were 6.8% and 5.9% higher than in the prior year.

The improved bottom line performance was driven by the benefits of revenue and volume growth, a 20bp reduction in comparable operating expenses as a percentage of revenue and slightly favourable input costs, though this was somewhat offset by the impact of adverse foreign exchange movements.

CEO Zoran Bogdanovic commented: “In 2018 we delivered another very good performance with revenue growth above our target range and another step up in margins. Strong volume growth in all our segments was helped by a record number of new product launches, whilst price/mix improved for the eighth consecutive year. This growth supported margin progress, which we delivered while increasing our investment in marketing.

“Our sharp focus on cost efficiencies continues while we invest in the business for growth. The shape of the business, capabilities and commitment of our people and our overall commercial proposition give us confidence in our ability to continue to grow revenues and margins.”

Elsewhere, Stock Spirits Group (STCK) has issued a trading statement ahead of its AGM later this morning.

The Central and Eastern Europe spirits and liqueurs specialist said performance during the period from 1 October to 14 February has been “solid” and the company is “on track with its plans for the year as a whole”.

In Poland the total vodka market recorded an increase in value (+2.4%) and a slight increase in volume (+0.9%), with growth from both the flavoured and clear vodka segments. In this key market, Stock has delivered 20 consecutive months of profitable year on year market share growth, with value market share at the end of December 2018 up to 27.8% from 26.3% last year.

In the Czech Republic the total spirits market grew in value (+2.1%) despite a slight decline in volume (-0.1%) during Q1, while Stock’s market share has returned to growth.

However, in Italy the categories in which Stock operates continue to decline, though market share remains broadly stable with value share at the end of December 2018 at 5.6% versus 5.8% at the end of December 2017. With the recently announced acquisition of Distillerie Franciacorta6, Stock will be the number one branded grappa business by value in the Italian off trade.

The Company will release interim results on 14 May 2019.

On the markets this morning, the FTSE 100 is up another 0.4% to 7,220.5pts.

Nestle is up 3.4% to CHF89.66 so far this morning, while Coca-Cola HBC has plunged 6.6% to 2,515p and Stock Spirits is up 2.4% to 230.5p.

Risers so far include Glanbia (GLB), up 1.9% to €16.94, McColl’s (MCLS), up 1.7% to 52.9p and PayPoint (PAY), up 1.1% to 910p.

Fallers include Majestic Wine (WINE), down 3.7% to 260p, Bakkavor (BAKK), down 1.7% to 150p and Hotel Chocolat (HOTC), down 1.6% to 310p.

Yesterday in the City

The FTSE 100 ended the day up a further 0.8% to 7,190.8pts yesterday.

Strong risers included FeverTree (FEVR), up 3.8% to 2,811p, Nichols Beverages (NICL), up 5.2% to 1,525p, Bakkavor (BAKK), up 3.1% to 152.6p and SSP Group (SSPG), up 2.6% to 672.6p.

Some of the fmcg multinationals had a good day, with Coca-Cola HBC (CCH) up 3.1% to 2,694p, British American Tobacco (BATS), up 2.4% to 2813p and Imperial Brands (IMB), up 1.8% to 2,625.5p.

It was a less positive day for the supermarkets, with Ocado (OCDO) down 2.5% to 924.8p, Tesco (TSCO), down 1.9% to 219.2p, Morrisons (MRW), down 1.4% to 236.3p and Sainsbury’s (SBRY), down 0.7% to 282p.

Also falling yesterday were PureCircle (PURE), down 6.7% to 270p, McBride (MCB), down 4.4% to 127p, Stock Spirits Group (STCK), down 3.4% to 225p and Just Eat (JE), down 3% to 720p.