Source: Hospodářské noviny Date: 16.12.2022

Jaroslav Strnad, former arms tycoon and founder of Czechoslovak Group, is expanding his activities within the CE Industries industrial group. He is now adding a completely new division to his traditional manufacturing companies in the rail transport and waste processing sectors. He called it FMCG, i.e. the fast-moving consumer goods division. It will cover manufacturing companies in the consumer chemicals sector and now also the food industry.

A few weeks ago he completed the purchase of Heinz Food, a wholesaler and manufacturer of health food with sales of around CZK 50 million. Along with this, he also took control of the Kaumy trading company. The latter operates the e-shop, which again focuses on so-called healthy confectionery.

Kaumy has an annual turnover of around CZK 200 million. Both companies were sold to Strnad by Martin Heinz, a fifty-eight-year-old Silesian businessman who founded the companies in 1994 and has now decided to slowly exit the business.

CE Industries will soon be joined by another domestic food company, this time from Pardubice - Kávoviny. The traditional Czech company traces its history back to 1896 and focuses on the production and sale of cereal drinks, biscuits and cocoa. Its turnover exceeded CZK 340 million in 2021, but it was also struggling with an operating loss. Strnad is expected to complete its purchase from holding company Alcor Investments in early 2023.

"Our FMCG division has five companies at the moment, but there will be some mergers soon, with three of the five being final. We plan to merge Coffee and Heinz Food into one company," CE Industries chief executive Adam Šotek said.

According to him, the trigger for the entry into the food industry was last year's acquisition of the Serbian manufacturer of detergents and cleaners Beohemija. It was Strnad's first foray outside his traditional business. It is the business of washing powders and other common household chemicals that he plans to build on with food sales.

"Last year, some financing became available from a tolling company originally intended for Vitkovice Heavy Machinery, but there was nothing to buy in our strategic businesses. Or the prices were so high that we could not accept them. And so we looked elsewhere," explains Šotek of entering new fields.

Moreover, he says, CE Industries grew up on restructuring and rescuing companies in trouble. And the companies being bought were not exactly experiencing ideal times. "That's what we still enjoy a lot today. Few people in the Czech Republic have done as many restructuring projects in the last five years as Mr Strnad. We have confidence in them," he adds.

This summer, the Serbian company Beohemija also acquired the Hodonín-based domestic cleaner manufacturer Solera, which was struggling with existential problems. It still had a turnover of around 140 million in 2020. CE Industries Group bought the company from its Russian owners this summer and soon renamed it Beohemija CS.

"We saved the company from bankruptcy. We wanted to get into the Czech market and distribution here. The product range also complements Beohemija's offer in an interesting way. We expect that the two companies will practically merge, we will probably move production from the Czech Republic to Serbia. Costs are significantly lower there," Šotek indicates further plans.

The Kauma company, or rather its e-shop, would then become a platform for online sales of all the companies' products, i.e. washing powders and cleaners, as well as food from Kávoviny and Heinz Food. Moreover, Šotek suggests that further acquisitions in this area may soon be forthcoming.

Already in the next year, the fast-moving consumer goods division is expected to bring the CE Industries group 1.3 billion crowns in sales and generate an EBITDA profit of 135 million. The entire CE Industries group of Jaroslav Strnad, which consists of two dozen companies, has total annual sales of over CZK 11 billion.