July 2, 2013
Nutreco completes exit from EU compound feed
After expanding them through a US$60 million acquisition from Cargill, Nutreco revealed it may complete its exit from Europe''s compound feed sector by selling Portuguese and Spanish compound feed businesses.
Dutch-based Nutreco confirms that it is considering the strategic position of these activities within its group however no decisions have been made. It states that ''A further statement will only be made if and when appropriate.''
The group said it was also mulling the future of its Spanish meat operations in the region, which include pig farming operation Inga Foods, which produces about one million animals per year, and Sada, Spain''s largest poultry producer. Both Inga and Sada are major customers of the compound feed unit.
The reviews come amid a strategic switch by Nutreco, under its so-called Ambition 2016 plan, to increase its focus on value-added markets, such as fish feed, and on developing countries.
The group sold its Hendrix compound feed business, which operates in Belgium, Germany and the Netherlands, to ForFarmers saying that the move was "in line with Nutreco''s strategy to participate in the consolidation of the compound feed industry in mature markets".
Nutreco, while owning the market leader in the Iberian compound feed business with Nanta, has highlighted that the region''s overall market is "fragmented", with some 900 operators, out of which the top 10 have a relatively small market share of 39%. Nanta has a share of about 13%, ahead of Vall Co with 7%, Guissona with 5%, Nuter with 4% and Coren with 4%.
Nutreco says in strategic documents that "it is anticipated that consolidation will continue" in an Iberian market where "circumstances continue to be challenging".
"The free market for compound feed is shrinking," the briefing says, attributing the decline to a shirt towards integrated farming operations, and herd cutbacks, by producers facing a cut to margins from high feed prices and the costs of enhanced animal welfare regulations.
"Feed volumes are flat to declining for most species. Overall herd sizes have declined slightly for most species apart from beef cattle and broilers."
The rethink follows Nutreco''s acquisition in late 2011 of Cargill''s Portuguese and Spanish feed operations, which the group said at the time fitted ambitions to boost "global market positions in feed specialties and fish feed in growth markets and to strengthen its leading compound feed market positions in Canada, the Netherlands and Spain".
The group also said then, "This acquisition enhances our solid position in this important region and clearly demonstrates our desire to drive further growth in markets where Nutreco has leading market positions." Nutreco shares stood 2.5% higher at a？？33.45 (US$43.70) in afternoon deals in Amsterdam.