Sales volume growth continues to drive Moy Park performance

Strong growth in sales volumes continues to drive performance for Northern Ireland-based poultry processor Moy Park as the group adjusts to lower poultry prices on supermarket shelves, particularly given the continued price war between retailers in the UK.

Full-year revenues for 2015 increased by a steady 1.4% to more than £1.4bn (€1.83bn), all of which was driven by robust growth in sales volumes of 6.7%. Sales volume growth was strongest in its UK and Ireland market (+8%), with sales volumes to continental Europe increasing 4% year-on-year.

The growth in sales volumes was partially offset by currency headwinds, with the pound sterling hardening significantly against the euro for much of 2015. The UK remains Moy Park’s most important market, accounting for around three quarters of sales, with the remainder of sales coming from Eurozone countries, including Ireland.

Impairment charge

The group’s earnings (EBITDA) increased by 3.5% to almost £112m (€141m), with earning margins widening slightly by 10bps to 7.7%. Moy Park’s pre-tax profits fell by more than two thirds (71%) last year to £9.4m (€11.9m) as a result of an impairment charge due to the closure of its Wisbech site and write-off costs incurred from the group’s mothballed initial public offering (IPO).

Moy Park chief executive Janet McCollum described the result as a strong financial performance in the face of challenging global market conditions.

“This strong performance was delivered against the backdrop of a highly competitive market, foreign exchange headwinds, commodity price deflation and export restrictions,” she said.

Interestingly, one of the highlights of last year for Moy Park was that it processed over five million chickens per week, which it describes as a significant milestone. The increased processing throughput highlights how the strong growth in sales volumes has supported the group’s performance during a period of retail price deflation for poultry products.

New owners

Also, the strong performance from Moy Park comes despite a switch in ownership of the business midway through last year. In June, Moy Park was acquired by the Brazilian giant and the world’s largest meat processor, JBS.

Controlled by the Batista family, JBS snapped up Moy Park in a near £1bn (€1.3bn) deal from its rival Brazilian meat processor Marfrig, who had been forced to offload what was the jewel in its crown to reduce a heavy debt burden.

The acquisition of Moy Park gives JBS a significant foothold in Europe for the first time, and the Brazilian group will look at the steady growth in sales volumes over the last number of years as a strong base to build from in the years ahead.

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