Salty snacks set out East
The company's new factory in Ukraine would add to its foreign operations, which currently include a plant in Romania. The company declined to reveal the value of its investment or the size of the planned IPO.
But investors will likely be cautious about buying shares in a company that recorded a loss of zł.8.2 million on revenues of zł.310 million in 2003. While Emmanuel Mitzalis, the firm's owner and CEO, attributes this to a poor economic climate and exchange rate fluctuations last year, the firm's results in the previous years were also unimpressive, with sales remaining stagnant. But the Star Foods shareholders, who are looking to exit the investment through the stock exchange, remain defiant.
"The company has very good sales predictions of zł.340 million for this year," says George Swirski, director for Central Europe at Advent International. "And the competitors have their own financial problems," he adds. The firm finally moved into the black in the first quarter of the year and a continued surge in consumer spending this year means that things are looking up for the crisps producer. Swirski also points to the strong primary market on the Warsaw Stock Exchange as strengthening the case for the timing of the IPO.
"Investors will not necessarily scorn a firm which generates losses," says Marek Witkowski, spokesman for Investor Relations Partners, "if it can identify the genesis of those losses, and the management gives a strong basis for improved performance." The successful spring IPO of packaging maker Plast-box, also a loss-maker, is a case in point.
Star Foods, which supplies most hypermarket chains, is number one in salty snacks in the country, with a market share of about 25 percent. Its competitors include Frito-Lay, backed by PepsiCo, with around 19 percent of total sales. Mitzalis says that Star Foods plans to increase its lead over Frito-Lay in local salty snacks over the next few years.
With its Ukrainian investment, Star Foods intends to take advantage of an increasingly sophisticated consumer market in that country, where supply remains weak. Frito-Lay, though it has operations in Russia, has not yet moved into the Ukraine, where consultants say the packaged food market is seeing steady growth as the post-1998 economic crisis recovery continues and consumers develop increasingly Western tastes. However, Mitzalis denies that his company is moving into Ukraine with the aim of finding a safe-haven from mighty PepsiCo.
"Frito-Lay is not there, but Kraft Foods is. So we're not afraid of rivals," he says, adding that Ukraine is now a very competitive market.
But Mitzalis says the company is well equipped to take on competitors, due to its experience in Romania, a "similar market" to Ukraine. He also adds that the company wants to increase exports to the West, which currently account for about two percent of total sales.
But investors will likely be cautious about buying shares in a company that recorded a loss of zł.8.2 million on revenues of zł.310 million in 2003. While Emmanuel Mitzalis, the firm's owner and CEO, attributes this to a poor economic climate and exchange rate fluctuations last year, the firm's results in the previous years were also unimpressive, with sales remaining stagnant. But the Star Foods shareholders, who are looking to exit the investment through the stock exchange, remain defiant.
"The company has very good sales predictions of zł.340 million for this year," says George Swirski, director for Central Europe at Advent International. "And the competitors have their own financial problems," he adds. The firm finally moved into the black in the first quarter of the year and a continued surge in consumer spending this year means that things are looking up for the crisps producer. Swirski also points to the strong primary market on the Warsaw Stock Exchange as strengthening the case for the timing of the IPO.
"Investors will not necessarily scorn a firm which generates losses," says Marek Witkowski, spokesman for Investor Relations Partners, "if it can identify the genesis of those losses, and the management gives a strong basis for improved performance." The successful spring IPO of packaging maker Plast-box, also a loss-maker, is a case in point.
Star Foods, which supplies most hypermarket chains, is number one in salty snacks in the country, with a market share of about 25 percent. Its competitors include Frito-Lay, backed by PepsiCo, with around 19 percent of total sales. Mitzalis says that Star Foods plans to increase its lead over Frito-Lay in local salty snacks over the next few years.
With its Ukrainian investment, Star Foods intends to take advantage of an increasingly sophisticated consumer market in that country, where supply remains weak. Frito-Lay, though it has operations in Russia, has not yet moved into the Ukraine, where consultants say the packaged food market is seeing steady growth as the post-1998 economic crisis recovery continues and consumers develop increasingly Western tastes. However, Mitzalis denies that his company is moving into Ukraine with the aim of finding a safe-haven from mighty PepsiCo.
"Frito-Lay is not there, but Kraft Foods is. So we're not afraid of rivals," he says, adding that Ukraine is now a very competitive market.
But Mitzalis says the company is well equipped to take on competitors, due to its experience in Romania, a "similar market" to Ukraine. He also adds that the company wants to increase exports to the West, which currently account for about two percent of total sales.
