Naturex buys Swedish Oat Fiber, as Q3 revenues slightly decline

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15 Nov 2017 --- Naturex is firming up its presence in the natural nutrition market with the acquisition of Swedish Oat Fiber, a specialized manufacturer of oat dietary fibers, oils and proteins. A Naturex spokesperson confirmed to FoodIngredientsFirst that the acquisition price is not being disclosed, however, CEO of the French-headquartered group, Olivier Rigaud, says this latest acquisition will strengthen Naturex’s position and forms part of the company’s continuing strategy for organic and external growth.

While the acquisition price has not been disclosed, Rigaud confirmed to FoodIngredientsFirst that Swedish Oat Fiber, with a turnover of just over EUR10 million, is a classic bolt-on purchase, allowing the company to diversify its portfolio. Swedish Oat Fiber is a very international business, present across the globe. The use of oat ingredients is very developed globally, with only Latin America being the exception thus far, according to Rigaud.

“There are a couple of reasons of interest behind this acquisition,” Rigaud tells FoodIngredientsFirst, “the first is that the oat dietary fiber fits very well with the Naturex portfolio for cardiovascular health ingredients. Today, we already have some very good ingredients that are primarily aimed at heart health, such as cocoa flavanols coming from the Open Innovation deal that we had with Barry Callebaut a year ago, which has an EFSA claim. But I’m also thinking about some of our own extracts, where we are investing in a lot of science around blood flow and we also have some traditional olive leaf extracts. These types of dietary fibers complement the current Naturex offering in terms of the nutrition segment and in that way have an impact on cholesterol levels. This is highly complementary to the functionalities that we are providing with our current ingredient portfolio.” 

“This second important driver behind this acquisition is that of dietary fibers as part of the diet. We all know that most consumers in the developed world are deficient in dietary fiber intake and we see a huge opportunity for oat dietary fiber, versus the more sophisticated soluble fibers. In that context, there are some regulation changes being made today [primarily in the US] where oat fibers are really recognized as dietary fibers and we see real opportunities to develop the business when compared to ingredients such as inulin, for example.” 

Moving forward, he notes: “Our intention is to leverage the Naturex international sales network and application lab network [11 across the world] to further develop and promote the oat ingredients.” “We see this as a growth business where we leverage our commercial footprint and have in mind that the fit is very good with how we are currently organized. We have an interest in pushing into both the nutrition and food markets, in both the proteins and fiber fraction space. Finally, we can leverage oat oil via the personal care division, where this could also complement the Naturex oil portfolio,” he adds.

At the same time as buying up 100 percent of the shares of Swedish Oat Fiber, the French group has reported its 2017 third-quarter and nine-month financial information. Rigaud believes that despite Naturex showing a slight decline in 2017 Q3 revenue, the company remains on track with its targets. 

“We are delighted and proud to integrate Swedish Oat Fiber, a leading company in natural oat ingredients and a pioneer in its field. We are very pleased to welcome its talented employees who have succeeded in achieving such a level of excellence to this day,” says Rigaud.

In a statement, Rigaud adds: “2017 third-quarter revenue reflects the effects of the accelerating reduction in the number of SKUs in addition to time lags of selective customer projects. Concerning 2017, we foresee a very limited impact on 2017 fourth-quarter growth that will marginally impact the consensus estimate of 16 percent for the EBITDA margin.” 

“The focus on accelerating our product portfolio's development and strengthening our commercial pipeline is building momentum. At the level of organic growth, commercial projects originating from our Springlabs network and partnerships through our Open Innovation Ingenium program are promising.”

“And at the level of external growth, the integration of the Haliburton International Foods's assets is entirely on track, setting the stage for a positive outlook in 2018. In light of these initiatives to achieve focused, sustainable and profitable growth, we remain confident in the outlook for 2018.”

Swedish Oat Fiber, is headquartered close to Gothenburg in an area known for oat growing and has been a key player in the market over the last 25 years. 

Slight decline in 2017 Q3 revenue
Naturex’s revenue at constant exchange rates in the 2017 third-quarter amounted to €96.6 million (US$114 million), compared to €98.4 million (US$116 million) in last year's same period. This includes a €1.0 million (US$1.1 million) consolidation scope effect from the acquisition of selected assets of Haliburton International Foods industrial and excluding a €2.7 million (US$3.1 million) negative currency effect stemming primarily from declines of the USD and the GBP. Like-for-like and at constant exchange rates, 2017 third-quarter revenue contracted marginally by 2.9 percent.

For the two strategic platforms, an innovative and differentiated offering and a targeted customer approach contributed to an improved product mix through without fully offsetting the base effects resulting from the reduction in the number of SKUs completed in the 2017 first half.

My Natural Food registered €50.8 million (US$60 million) in third-quarter revenue, compared to €51.5 million (US$60 million) in the same period in 2016. Over the period, trends were positive for the “specialty fruit and vegetables” and “antioxidants” category.

My Natural SelfCare had €29.2 million (US$34.5 million) in revenue compared to €33.5 million (US$39.6 million) in the 2016 third-quarter, down significantly due to an unfavorable comparison base for selected plant extracts and postponed orders by some of the company’s customers. 

The shift of the offering's focus to health, well-being and natural nutrition is moving forward with the launch of Open Innovation projects, says Rigaud, while other activities represented revenue of €13.8 million (US$16.3 million) compared to €13.4 million (US$ 15.8 million) one year earlier.

“At the geographical level, growth has been adversely affected by disparate market conditions and high volatility for selected currencies. The support of a regional sales organization and a global network of 11 application labs nevertheless fuelled our continuing development,” adds Rigaud.

With positive trends in their respective markets, the Asia-Pacific region had €14.1 million (US$16.7 million) in revenue and Latin America €8.4 million (US$9.9 million).

In North America, revenue amounted to €38.5 million (US$45.5 million). This included €1.0 million (US$1.18 million) in sales from the business acquired from Haliburton International Foods and which completes the offering of Vegetable Juices Inc.'s natural vegetable-based solutions in the Food category.

Speaking about the acquisition, Rigaud adds how the Swedish Oat Fiber offering will contribute to strengthening Naturex's presence in the nutrition segment by means of convergence with the positioning of the existing ranges.

“Immediate complementarity in the cardiovascular health segment with the current portfolio by adding value to our existing offering in order to contribute to reducing risk factors relating to a sedentary lifestyle, obesity, diabetes and high blood pressure,” he says. 

“The addition of oat beta-glucan fibers to Naturex's current portfolio (Aronia, cocoa flavanols, olive leafs) will offer our customers an additional natural solution with beneficial effects on cholesterol levels, scientifically proven and recognized by the European Food Safety Authority in Europe (articles 13.1 and 14), the FDA in the United States and the OFSP (Federal Office for Public Health) in Switzerland.” 

Rigaud also talks about future diversification in the plant-based protein segment with the valorization of the protein fraction contained in oat flour. 

“This development will strengthen our offering in the nutrition range to address the emergence of new lifestyles and dietary behavior like vegetarianism and veganism,” he adds. 

“With this new source of oat-based protein, Naturex completes its range which includes notably proteins from Shiitake mushrooms fermented under its partnership agreement with MycoTechnology.”

Meanwhile, Peo Crona, CEO of Swedish Oat Fiber says the company is very pleased to join the Naturex Group which shares the same “passion for our business and common values of entrepreneurship, creativity and integrity.”

“We are convinced that Naturex will know how to provide a new strategic impetus to Swedish Oat Fiber and support its development and future projects through its international commercial network R&D support and the expertise of its network of application laboratories.”

By Gaynor Selby & Robin Wyers

To contact our editorial team please email us at editorial@cnsmedia.com

Naturex

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Naturex sources, manufactures and markets natural specialty ingredients for the food, health and cosmetic industries. As the Natural Maker, the company actively supports the global shift to natural by directly addressing key consumer expectations through an offer built on two main focus areas: My Natural Food and My Natural Selfcare. Naturex’s portfolio includes colors, antioxidants, specialty fruits & vegetables, phytoactives, and numerous other plant-based natural ingredients, designed to help its customers create healthy, authentic and effective products.

The Group’s strong commitment to sustainability, continuous innovation process, and the talent of its people are at the heart of its success.

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