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INTERVIEW-Illy Group may list illycaffe to fund growth

Published 11/18/2010, 09:54 AM
Updated 11/18/2010, 09:56 AM

* Aims to keep 1:1 debt-to-equity ratio in funding

* No more diversification plans at present

MILAN, Nov 18 (Reuters) - Italian group Illy could list its coffee unit illycaffe or sell a stake to private equity investors if financing needs for future growth exceeded its own funds and debt targets.

"The idea of a bourse listing of illycaffe has been put forward on some occasions. It is an existing idea for us, but it is not on the agenda today," chairman Riccardo Illy told Reuters on Thursday.

Illy Group, a holding company, owns 100 percent of illycaffe which sells its trademark 100-percent arabica premium coffee in about 140 countries. It has added tea, chocolate and wine to its core coffee business in the past six years and does not plan further diversification for now, its chairman said.

Illycaffe itself is engaged in several projects whose growth requires considerable investment, such as iperEspresso coffee in capsules for home use, a chain of Espressamente Illy coffee shops, and production of canned coffee drinks in a joint venture with Coca Cola, Riccardo Illy said.

"If, in the future, we would have to support investments which the company is unable to self-finance or finance keeping ... a debt-to-equity ratio which we consider ideal at one-to-one, then we can consider a listing for illycaffe or an entry of private equity investors," Riccardo Illy said.

Illycaffe's 2009 earnings before taxes, depreciation and amortisation (EBITDA) rose 3.6 percent to 39.6 million euros ($54 million) on revenue up 1.2 percent to 283 million. Net profit fell a third to 5.2 million euros.

Illy Group also owns Italian chocolate maker Domori, Italian winemaker Mastrojanni, 75 percent of French tea company Dammann Freres, and 40 percent of Agrimontana, an Italian maker of premium jams and candied fruits.

"At the moment we are working to increase growth of the acquired companies and squeeze all possible synergies from them," Riccardo Illy said.

The group's premium coffee, tea and other products are sold via similar intermediaries and target the same consumers. (Reporting by Svetlana Kovalyova; Editing by Dan Lalor) ($1 = 0.7331 euro)

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