Loomis' New CEO May Seek Larger Acquisitions, New Marketsby
Loomis AB plans to look for larger acquisitions and new markets when the Swedish cash handling provider’s new chief executive officer starts next month.
Loomis has recently made smaller acquisitions of about 100 million to 200 million kronor ($25 million), complementing operations in existing markets. But it now sees scope to make acquisitions on a larger scale and expand in new markets when Patrik Andersson takes the reins in early May, interim CEO Lars Blecko said in a phone interview on April 4. The acquisition of Via Mat in Switzerland for about 200 million Swiss francs ($209 million) in 2014 is “the scope I’m talking about regarding larger acquisitions,” Blecko said.
Loomis has focused more on its operating margin after Blecko became interim CEO in September following the departure of Jarl Dahlfors, amid an absence of larger acquisitions. Such deals are likely to be back on the table when Blecko, who was Loomis’ CEO between 2008 and 2013, is replaced at the helm.
Under Blecko, the operating margin reached 11.6 percent in the fourth quarter, up from 10.5 percent a year earlier. Loomis targets a margin of between 10 to 12 percent. If such larger acquisitions are made, the margin could be hurt as the 12 percent doesn’t include acquisitions and as deals often result in some restructuring costs and “operational disturbances” related to the deal, he said.
“The margin target question is related a little bit to the fact that I’ve been an interim CEO handling the U.S. simultaneously,” Blecko said. “Patrik starts in the beginning of May, and then focus will probably shift a little bit more toward larger acquisitions and that can have a negative effect on the margin. That’s why we were a little bit careful with the 10-12 percent target.”
Still, the “margin will continue improving the way things look now,” he said. “That is and has been our strength the last seven to eight years.”
Loomis shares rose as much as 1.9 percent, the steepest intraday gain since March 11, and traded 1.8 percent higher at 225.60 kronor as of 9:36 a.m. local time in Stockholm trading.
Regarding acquisitions, Andersson will have “a huge say in all that,” Blecko said. In terms of new markets, countries that haven’t yet outsourced cash handling “are huge business opportunities.” Loomis regards it as “natural to build on what you have” and may seek to expand in countries located in the same regions as existing markets. Growing “from Argentina to somewhere in Latin America is an attractive possibility,” he said.
Eastern European countries are also “somewhat interesting,” as is cash-intensive countries such as Germany and Italy, he said. In Turkey, there may also be opportunities as cash handling is outsourced, Blecko said.
"We can expand to new markets near term -- we have the capacity, potential, finances and management,” Blecko said, adding that the company has theoretically about $500 million, through bank finances, to work with for acquisitions, he said.