Hillsdown to sell fowl business

12 May 1998

Hillsdown to sell fowl business

By John Farrant of Poultry World

HILLSDOWN is selling its poultry interests to focus on grocery foods and deliver better returns for its shareholders.

It was poultry that launched Hillsdown Holdings into the big time with the acquisition of the Imperial Groups UK poultry empire in 1982 for £48.5 million in cash over five years. Hillsdowns latest annual figures for 1997 reported an operating profit of £178.4m on sales of £3m.

Following the sale agreed in April 1998, the initial restructuring by the end of the year found Ross Poultry, Nitrovit, Buxted and Daylay operating as separate companies under Hillsdown, standing or falling by their own efforts.

All except Nitrovit – the feed compounders – are largely still there after reshuffles plus some more acquisitions, such as Twydale Turkeys. A final reshuffle separates Ross Breeders from Other Poultry, excluding Buxted Foods, which has moved into the chilled foods business.

So the two distinct poultry buys are Ross Breeders on an operating profit of about 18.6% of sales and Other Poultry on close to 4.3%. This takes in feed, poultry meat and egg production and processing through Premier, Moorland, Buxted and Daylay, plus supplies of layers and equipment through Ross Poultry and its subsidiary Sterling.

Hillsdown states: “The divisions focus has been on adding value to counter the cyclicality arising from the pure commodity end of the market. The businesses are well placed to benefit from a growth market in which premium quality customers are becoming increasingly demanding in the areas of food safety, traceability and animal welfare.

Ross Breeders is clearly a choice buy, although accounting for only 11.25% of the sales last year by all the groups poultry interests.

It is described as “a world leader in the genetic improvement of poultry breeding stock. It supplies broiler breeding stock worldwide and has number one positions in Europe, North and South America. Ross Breeders is an excellent business but fundamentally different from Hillsdowns other poultry processing operations. We are therefore examining a number of options for separating Ross Breeders.”

Meanwhile, Hillsdown also announced last week that it plans to sell off its meat and bonemeal business. The sale is expected to generate £500-600m for the parent company. The money will be used to pay off some of its £300m debt and provide a cash payment to shareholders, following many years of poor performances.