Mieszko on acquisition trail

Related tags European union Poland

Leading Polish confectionery company Mieszko says it is
currently in negotiations to acquire a company within the
confectionery sector in the course of this year. The company added
that at the present moment it is negotiating with several domestic
players.

According to a report from the Warsaw Independent​ the company said it maybe launching an IPO in order to finance the project. Marek Moczulski, Mieszko president, said the company will be focusing its attentions on small and medium players in the market. This sector, he added, currently accounts for 30 per cent of the market and is an area where future consolidation is 'inevitable'.​ Moczulski estimates that the current value of the entire confectionery market in Poland currently runs at PLN 4.5 - 5 billion (€1.26 - 1.40bn).

The company has been struggling against losses but last week announced that its net losses had been reduced to PLN 453,000 for the second quarter. This compared favourably to the same period last year when the company recorded a loss of PLN 8 million. Operating losses also slipped to PLN 949,000 from PLN 4.1 million for the corresponding quarter. The improved performance came about from a greatly increased turnover, up from PLN 34.01 million in the second quarter last year to PLN 40.9 million this year.

"We are very happy about the results. We've seen significant improvements, but the worst is over for the company and now is the time for growth. I do not want to make binding declarations as to whether or not we can generate a net profit this year, but when it comes to next year, I am certain that we will be profitable,"​ Moczulski told the Warsaw Independent.

The improved financial performance came despite the Polish confectionery sector being hampered by rising sugar prices, which have come about following the country's accession to Europe and the adoption of EU sugar tariffs. Moczulski said that the company was able to neutralize the negative effect of rising sugar prices by following a careful strategy, which meant that its retail prices increased only marginally.

"In the first half of the year, the prices of sugar rose more than 80 percent. If we had not taken appropriate action before, preparing the company for the increases, we would have a gigantic drop in margins, since not all costs can be passed on to the customer. Thanks to the reorganisation of production and increasing efficiency, we were able to reduce the influence of the price hikes,"​ he said.

The company, which is currently listed on the Warsaw stock exchange and is a leading manufacturer of caramels, chocolates and wafers, has plans for the development of its export markets. Currently exports focus on the European Union, US, Canada and increasingly Russia. Entry to the European Union will now make exports far easier to push exports onto the significant spending power represented by this market, where Mieszko says it is hoping to concentrate on high-margin products.

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