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Portugal’s Brasmar plans more chilled processing M&A after Spanish smoker deal.

Sérgio Silva, CEO of Brasmar. Photo: Dan Gibson, Undercurrent News.
BRUSSELS, Belgium – The Portuguese processor and trader Brasmar, which is 50% owned by private equity MCH Capital, has laid plans for multiple acquisitions in 2019 as it pursues an ambitious double-digit growth target, according to CEO Sergio Silva.

Brasmar had previously announced the acquisition of Spanish salmon and whitefish smoker La Balinesa on May 3, a deal which Silva told Undercurrent News was likely to be the first of several this year.

“We are continuing to look. There are some opportunities we are looking into now, and we hope to close in the next two to three months,” he told Undercurrent at the Seafood Expo Global in Brussels, Belgium. “We prefer diversified companies that have a wide range of products and clients, and can be everywhere in Europe. Europe for us is our priority.”

Regarding the deal for La Balinesa, Silva said it was the chilled product line that had attracted Brasmar to the Spanish salmon smoker. “The company seemed to be very interesting — they’ve got very good facilities, they’ve got very good conditions for production, and they are prepared to grow. We think it’s a company with a lot of potential for growth, and we also wanted to open refrigerated (chilled) products, so smoked salmon was an interesting product to start with,” said Silva.

Silva said the acquisition would add roughly €20 million to Brasmar’s total turnover, with plans to increase La Balinesa’s output substantially in the near future.

Additionally, the deal also gave Brasmar a greater presence in neighboring Spain, where it has been looking to gain a greater foothold for some time.

“We are definitely seeing some opportunities in the Spanish market, and we are hoping to close more deals there in the near future,” Silva said. “But although Spain is the priority, we are also looking at opportunities in France, Germany, Europe in general.”

Brasmar’s aim, Silva noted, is to develop new logistics and a new market for all its refrigerated products, and not just salmon. With that in mind, acquisitions are necessary for the company to expand, but the Portuguese firm prefers to take its time when choosing new ventures.

“We don’t just buy for buying’s sake – a firm must match with us,” Silva told Undercurrent. “In the last two or three years, I’ve seen more than 50 companies, but just now was the first acquisition, so it must be very interesting for us.”

Double-digit growth plans

Based in the town of Guidoes on the northern outskirts of Porto, Brasmar reported total revenue of €194.5m ($218m) in 2018 and is aiming to increase that figure by double digits this year as well.

In order to achieve this, Silva notes, acquisitive growth has become necessary.
“We’re trying to keep that growth rate going — it’s not because of the MCH, it’s because that’s just how we’ve always wanted to do these things. Now it will be more by acquisitions because organic growth is becoming difficult.”

Brasmar sells more than 200 different varieties of seafood, although the firm particularly deals in cod (20%) and octopus (10%). The company is an active trader, and Silva estimates that 60% of its total revenue for 2018 came from exports, up from 50% Undercurrent reported last year.

Although the poor start to 2019’s octopus season was felt by the company, Silva said it was unlikely to have any impact on the firm’s bottom line.

“Octopus prices went low, very low, in the beginning of the year, and the end of last year, 2018, was very bad too. But even though it was not a very good start, prices have recovered and we think the rest of the year will be more normal, so we should recover.”

“Besides, we are very diversified, so it doesn’t have a big impact for us,” the Brasmar CEO added.

Outside of Europe, Brasmar also exports overseas to Brazil and the US, primarily selling cod to the Brazilian market, and octopus to the US to meet growing consumer demand for the product.

“The United States is buying a lot of octopus, we’ve found, and it’s an important market that we are developing now, so it’s not only for Europe. Even Brazil is starting to buy octopus, so new markets are opening,” Silva said.

The company has an average sales volume of roughly 4,000 metric tons per month, of which just over 45% was reportedly sourced from the company’s processing outlets in Portugal and Norway.

According to Silva, Brasmar operates three facilities in Portugal for processing, packaging and close-packing the company’s wide array of products, while the Norwegian plant is strictly for processing cod.

Last year, Brasmar announced that it had added an additional 800t of monthly capacity to its Portuguese facility, bringing its total to 2,500t. However, Silva confirmed that the company was still growing to fill that total.

“The processing volume last year was around 1,800 per month, more or less, but we still have potential to grow, and this year it should be around 2,000 per month, solely from processing,” he told Undercurrent.

Contact the author dan.gibson@undercurrentnews.com.

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