Aryzta
2017 got off to a very difficult start for Aryzta. The bakery group announced in January that it expected profits in the business to be down 20% as it continued to lose key customer contracts in North America. Shares in Aryzta plunged as much as 30% on this news.
By March, long-serving chief executive Owen Killian, along with several other senior management figures, resigned from the company. Kevin Toland was announced as the company’s new chief executive in May. Toland brings significant experience to the company, having worked as a chief executive of Glanbia’s US division and most recently as chief executive of Dublin Airport Authority (DAA).
Shares in Aryzta will finish the year almost 25% down on where they started, but the mood among investors is more optimistic since Toland arrived. The company still faces big challenges but a corner appears to have been turned.
Danone
French dairy giant Danone enjoyed a very strong 2017 as dairy markets rebounded. Shares in the company increased almost 20% over the year to finish the year on a record high of €71.20, meaning Danone is valued at close to €48bn. Quarterly results throughout the year show that infant formula is driving profits in the business, with sales growing at double-digit figures. Danone also sold its organic dairy business in the US in 2017 to rival French dairy giant Lactalis for €770m. The sale of this business allowed Danone to proceed with its €11bn takeover of WhiteWave Foods.
Donegal Investment Group
2017 has been a positive 12 months for shareholders in Donegal Investment Group as the share price increased almost 50% driven by a return to profit. Sales increased strongly as a poor potato harvest across Europe boosted demand for the company’s seed potato business. Following a four-year legal battle, Donegal finally settled its shareholder oppression claim taken against Monaghan Mushrooms. It also sold its 2,400ac organic farm, An Grianan, for €17.4m during the year.
FBD
Shares in FBD are up more than 50% in the past year. The company, with its new management team, continues to see a steady improvement in its financial performance from better risk selection and improved price adequacy. FBD is expected to deliver low double-digit return on equity in 2017 – earlier than previously indicated. Despite storm Ophelia hitting the insurer for between €4m and €6m, its new reinsurance programme mitigates the cost of claims to €2.5m. The improving performance may see FBD return to paying a shareholder dividend. However, the company has not indicated when this is likely.
Glanbia
Shares in Glanbia are down around 6% over the past year. With the co-op acquiring 60% of the consumer foods and agribusiness from the plc to create Glanbia Ireland, Glanbia’s primary dairy processing in Ireland and the US is controlled by JV arrangements. Despite slowing growth and falling margins in performance nutrition, which had been the biggest driver of growth in recent years, its ingredients business bolstered performance in 2017. The fall in margins was not unexpected. Over the next year, shareholders will be watching the evolution of the performance nutrition business.
Greencore
Shares in the Irish-headquartered food-to-go business are down 7% over the year. In the US, Greencore’s business expanded following the acquisition of Peacock Foods in November 2017. Despite the business being significantly reshaped over the last year it has not been without its challenges. It lost a large contract with Starbucks and restructuring costs as a result of the Peacock Foods acquisition hit profits during the 2017 financial year. It also took a once-off hit to its UK business. Investors will be looking to growth numbers coming from the US side of the business over the coming year.
Hilton Food Group
The London-listed secondary meat processor, will finish 2017 on a high note, with shares increasing by more than a third (+35%) since the start of the year. Volumes continue to increase, along with solid profit and margin growth. Hilton completed the acquisition of Icelandic Seachill, a UK-based seafood company contracted to supply salmon and whitefish to Tesco. To finance this, Hilton issued new shares in the company and raised almost £56m (€64m). The share price has since risen 10%.
JBS
2017 will be a year to forget for embattled meat giant JBS. Shares plunged more than 20% this year, wiping €1.8bn off the value of the Brazilian company.
In March, Operation Weak Flesh exposed widespread illegal practices in the Brazilian meat industry, with a number of meat processors found to be selling rotten or tainted meat after bribing customs officials. JBS was forced to close 33 of its 36 meat plants in Brazil as a result.
The year got worse for JBS as corruption allegations continued to dog senior management. Seven senior executives at JBS signed a plea agreement with Brazilian prosecutors after admitting to charges of paying €165m in bribes to public officials and politicians in Brazil since 2010. JBS was handed a €3bn fine as a result of the bribery charges.
John Deere
Shares in Deere & Co, the maker of John Deere machinery, surged more than 50% over the last 12 months. The maker of the famous green tractors returned a strong performance in 2017. John Deere said it sold more machines this year, with selling prices also higher. The market in South America proved to be exceptionally strong this year, with export sales also boosted by a weak US dollar. The group is forecasting a further 10% increase in sales for 2018.
Kerry Group
Shares are up 40% in the year. With a new CEO in place, Kerry raised its annual growth outlook from 3% to 7% per annum to in excess of 10% annually over the next five years. After a period of significant expansion both organically and through acquisition, Kerry Group is now set to yield the dividends of these investments. It also continues to see consistent volume growth coupled with price growth. And despite raw material price inflation, especially in dairy, Kerry has been able to maintain margins through price recovery during the year. Flavours and beverage are the key drivers of growth in the coming year.
McDonald’s
Over the course of 2017, McDonald’s shares have rallied almost 40% to reach record heights close to $175 per share. Investors reacted positively after the fast food giant announced plans to double its restaurant footprint in mainland China over the next five years. McDonald’s chief executive Steve Easterbrook said he aims to increase its restaurant numbers in China from 2,500 today to 4,500 by 2022, with the pace of restaurants opening set to double to 500 per year.
Monsanto
Shares in Monsanto, the maker of Round-up, increased a steady 10% over the course of 2017 to close out the year above $115. In 2016, Monsanto was acquired by German chemical group Bayer in a $66bn deal. The deal is currently pending regulatory approval in the EU and the US. The Bayer-Monsanto tie-up would create the world’s largest seed and chemical company, with a 25% share of the market in both sectors. In August this year, the European Commission’s competition authority opened an in-depth investigation into the proposed takeover to assess if the merger will reduce competition in areas such as pesticides, seeds and seed traits.
Nestlé
Shares in Nestlé, the world’s largest food company, increased 15% over the course of 2017, bringing the company’s market value to an all-time high of €222bn. However, the steady performance of the company’s share price masks the fact that Nestlé is in a battle to achieve growth. Full-year sales growth for its 2016 financial year were the weakest reported by Nestlé in 20 years. And sales growth for 2017 is expected to be weaker again. As a result, the company is planning some major restructuring across the business next year to try and kick-start growth once more.
One51
It has been a busy year at One51, where shares increased 50%. Not only did it receive a takeover offer from CapVest of €2.50 per share in October, which ultimately fell through, the company is to now push ahead with plans for an IPO and stock market listing in 2018 should the markets permit. This will see the company restructure and reorganise its two Canadian investors. It will also rename to IPL Plastics plc. With its North American business now accounting for 75% of turnover, this is the big driver of growth. It is performing strongly and, coupled with the restructuring of capital, there is good earnings upside potential in the near term.
Origin Enterprises
Shares in Origin are up 6% in the year. Performance at the agri-services group which owns Goulding Fertilisers and UK agronomy company Agrii, is largely dependent on seasonal weather, farmer sentiment and global commodity markets. Its Irish and UK operations account for two-thirds of the of the business but its east European operations continue to account for a growing share. 2018 looks set to be favourable for the group as strong winter plantings mean there is a solid foundation for input demand.