Premium Brands Holdings aims to add almost C$1 billion ($698.4 million) to its revenue as the Canadian food manufacturing giant announces yet another acquisition.
Recently, President and CEO George Paleologou communicated that potential damage from U.S. tariffs on Canada has been mostly disregarded by the company. As a manufacturer specializing in fresh meats, seafood, and bakery products, Premium Brands has set a sales revenue target of C$7.2 to C$7.4 billion for the upcoming fiscal year.
In its recent report, the company highlighted a 3.3% increase in revenue, now at C$6.47 billion for the 12 months ending December 28. Furthermore, Premium Brands announced a strategic acquisition of Denmark Sausage, a premium sausage manufacturer based in Peoria, Arizona, for $21 million.
This acquisition-focused retail and foodservice supplier recently disclosed a trio of new acquisitions in December: NSP Quality Meats, Casa Di Bertacchi, and Italia Salami, with the first two located in the U.S. and the latter in Canada.
Paleologou confirmed during the analysts’ results presentation that the U.S. market represents about 60% to 65% of the company’s organic growth outlook. Its local manufacturing presence offers considerable protection against the tariffs set to be enforced in Canada this April.
“Ultimately, we’re trying to grow the business and we’re trying to improve our existing businesses. The four acquisitions that we’ve done will be incredibly accretive ultimately for our businesses,” stated Paleologou.
“We’re assessing all acquisitions in a conservative way. We’re not going to be aggressive in terms of valuation. If we find acquisitions that help our growth, they’re very accretive and improve the profile of our various businesses, we will do that.”
Paleologou characterized Denmark Sausage as being akin to another portfolio company, Isernio’s, which specializes in premium sausage, mince, and marinated pork and chicken products in Washington State.
“We want to build Denmark similarly to the way we built Isernio’s after we purchased it. I think Isernio’s is four times bigger today than when we acquired it a few years ago, and we foresee similar growth opportunities with Denmark,” he told analysts.
The impending U.S. tariffs on Canada are scheduled to take effect on April 2, coinciding with reciprocal taxes from Canada.
“Canada has also imposed an initial round of tariffs on $30 billion of certain U.S. goods, with a second round impacting a wider array of U.S. goods valued at $125 billion expected to commence in early April,” noted Premium Brands in its results statement.
“Discussions between the U.S. and Canadian governments remain ongoing, but there is no assurance that these discussions will lead to a successful withdrawal or reduction of tariffs.”
While Paleologou indicated that the company’s local manufacturing presence in both U.S. and Canadian markets generally insulates Premium Brands from tariffs, a certain amount of business transit does occur across borders.
“We are confident that we will be able to largely mitigate the impact of tariffs on these sales,” he informed analysts.
Both Premium Brands’ primary revenue-generating division, Specialty Foods, and the wholesale business unit, Premium Foods Distribution, do have some exposure to tariffs. For instance, approximately C$300 million in cooked meats is shipped across the border.
“Regarding our Specialty Foods segment, its diversified network of production facilities across Canada and the U.S. enables it to shift production of many products crossing a border to the jurisdiction in which they are sold,” explained Paleologou.
“Concerning our Premium Foods Distribution segment, processed lobster is the primary product crossing the border. However, this is produced from a scarce resource, resulting in very limited supply options for customers.
“Moreover, our Premium Foods Distribution segment maintains significant lobster processing operations in both Canada and the U.S.”
Premium Brands effectively has another three years to realize its ambitious goal of achieving C$10 billion in revenue by fiscal 2027, along with C$1 billion in adjusted EBITDA.
The EBITDA outlook for the new financial year is anticipated to be between C$680 million and C$700 million, following a 6.2% increase to C$593.7 million in the previous 12 months.
Meanwhile, adjusted EPS fell by 1.2% last year to C$3.98, with no guidance provided for that metric for fiscal 2025.
