Lisbon, Dec 13 - Portuguese supermarket firm Modelo Continente wants to make acquisitions abroad in 2008, especially in Spain, after consolidating its leading position at home, its chief executive said.
The company plans to invest 400 million euros ($531 million) over the next two years in Portugal, Chief Executive Nuno Jordao said in an interview with Reuters.
"In 2008 Modelo will be a lot better prepared to succeed in small, medium or big opportunities that may arise (abroad)," said Jordao, adding that the company targeted revenue growth of 10 percent in the next two years.
"We will not be passive if we find these opportunities."
Modelo Continente is the largest business unit of conglomerate Sonae, representing more than 60 percent of its annual revenues. It is Portugal's leading supermarket operator with 500 shops and 27,000 employees and competes with Jeronimo Martins in the local market.
At the end of 2005 the company sold all its retail operations in Brazil to Wal-Mart for 635 million euros.
Jordao said Modelo had recently entered tenders to buy companies in Spain and in other countries but stepped back due to the high cost of these operations.
"The opportunities we looked at until now were not interesting. They were too expensive. If we paid the price, we would destroy value," he said.
He said Modelo was not seeking partnerships to carry out its expansion.
POSITIVE PERFORMANCE
Modelo Continente's performance is expected to remain positive in the next two years, with revenues rising to around 4 billion euros in 2008 despite unfavourable economic conditions for consumers in Portugal, he said.
For 2005 Modelo reported 3.86 billion euros in revenue.
"I have a positive view for the top and bottom line and EBITDA (in coming years). But retailers have to make their economic projections in a setting of low consumer spending," he said.
Portugal's gross domestic product fell 0.2 percent in the third quarter from the previous quarter, hit by a rise in imports and lower spending.
Profits at Modelo increased to 91 million euros in the first nine months of 2006 from 65 million a year earlier, while revenue fell to 2.197 billion euros from 2.831 billion, hit by Portugal's low economic growth.
Jordao said he was confident Modelo's solid shareholding structure would enable the company to maintain its 15-year leadership position in the market. Portugal's richest man, Belmiro de Azevedo, controls Sonae and Modelo.
"What has distinguished Modelo has been its shareholder stability and a professional management team," he said.
In February Sonae launched an 11.1 billion-euro hostile bid for Portugal Telecom -- Portugal's biggest ever merger operation.