Princes Group signals price hikes as Middle East conflict piles pressure on costs
Tinned tuna giant Princes has signalled a potential hike in prices, as the conflict in the Middle East continues to pile pressure on business costs.
The Liverpool-based owner of Branston and Flora, noted that it could raise prices where needed to offset cost pressures from rising fuel, transport and plastic packaging costs caused by the Iran war.
The group said it would implement “pricing mechanisms” where necessary to manage rising costs, as it is yet to secure the remaining 30 per cent of its energy requirements for 2026, putting it at risk of being slapped by short-term market volatility.
“The group is observing renewed inflationary pressures, with fuel prices increasing and both road haulage and sea freight costs trending upwards, including the reintroduction of fuel surcharges by major carriers,” Princes Group warned.
It is also bidding to manage logistic pressures through contractual mechanisms, pricing actions and route optimisations, as the Strait of Hormuz in Iran remains closed, clogging a fifth of the global oil supply.
Projected revenue dips
The group’s projected revenue also dipped 6.5 per cent on a like-for-like basis, following deflationary pressures in core raw materials and deliberate exits from low-margin contracts, during the financial year.
But reported revenue jumped, as Princes reaffirmed its focus on expanding its presence across Europe following its London listing.
The FTSE 250 group recorded a 46 per cent year on year increase in overall revenue, reaching £1.9bn. This reflected the combination of its food manufacturing company New Princes S.p.A, and cost-saving measures across the enlarged group.
Profit before tax hit £55m, swinging back from a £6m loss the prior period.
The group also bolstered its net cash position as it hit £311m, a recovery from its net debt of £417m at 31 December 2024, with Princes trading in line with expectations.
Shares rose 1.8 per cent in early morning trading to 379p, a 20.1 per cent decrease from its initial IPO price of 475p and market value of £1.1bn.
Fragmented Europe
Following its listing last November, the group has maintained its focus on enhancing its global standing and boosting its “M&A firepower”.
Through New Princes S.p.A the group acquired Italy’s Plasmon baby food brand, carving out 30 per cent market share through boosting manufacturing capacity.
New Princes S.p.A also acquired Carrefour Italy in December, granting Princes access to roughly 1,000 stores as well the opportunity to grow revenue through both branded and own-brand products in Carrefour’s portfolio.
It also secured fresh multi-year contracts with a number of UK and European retailers, while its real estate investments, which total £82m across the Royal Liver Building and Cross Green facility, delivered a yield of 11 per cent per annum through both rental savings and rental income.
Angelo Mastrolia, executive chairman, said: “We have built a robust balance sheet and a highly cash-generative platform, providing significant financial flexibility.
“This positions us to act decisively in a consolidating market, where scale, execution capability and access to capital are increasingly critical.
“Our priority remains disciplined, value-accretive M&A…Princes is uniquely positioned to act as a consolidator in a fragmented European food and beverage sector.”