Milling interests for sale?

by Teresa Acklin
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Bouygues disposition plan may mean flour milling divestiture.

   Bouygues, the leading French construction company that includes the Grands Moulins de Paris flour mill among its investments, said it will launch a program to dispose of “non-strategic assets” over the next 18 months. In announcing a major writedown of the company's industrial holdings, Martin Bouygues, chairman, disclosed that the group would seek to raise FFr3billion (U.S.$587 million) from the dispositions.

   While no listing of the “non-strategic” properties that will be sold was announced, speculation was rife that the list certainly would include the flour milling interests. Ownership of Grands Moulins de Paris was acquired several years ago, and this transaction was ascribed to Bouygues' desire to have control of the flour milling property in the heart of Paris on the Seine river, adjacent to the site of France's major new national library. That property is France's largest capacity plant on a single site.

   Indeed, it is believed that Bouygues already has entered into a contract for the acquisition of the Paris flour mill by the government, but that this contract requires that the mill continue to operate until title is formally transferred. The flour milling unit has plants outside of Paris, and the company recently announced plans to build a new milling complex on the city's western outskirts (see January/February 1996 World Grain, page 62).

   Although flour milling is hardly related to Bouygues' massive construction and telecommunications interests, the group was credited with continual upgrading of the milling properties.

   As the result of extraordinary provisions totaling FFr4.4 billion (U.S.$861.5 million) taken against its financial and industrial holdings, its telecommunications investments and its property activities, Bouygues realized a net loss of FFr4 billion (U.S.$783 million) for the 1995 fiscal year. Without these special charges, the group would have had net earnings of FFr400 million (U.S.$78.3 million), compared with earlier forecasts of FFr700 million and 1994 earnings of FFr573 million. Looking ahead, Mr. Bouygues said net earnings in 1996 should return to near 1994 levels.

   Group turnover in 1995 amounted to FFr81.3 billion (U.S.$15.9 billion), up 2% from the prior year. All of the increase was attributed to acquisitions.

   In detailing the special provisions, Mr. Bouygues said the group had made a charge of FF1.1 billion (U.S.$215 million) against financial and industrial operations, of which flour milling is a part. He said the company's financial and industrial operations had suffered in the worsening economic environment in Europe.

   In announcing the year's results, Mr. Bouygues refused to comment on the corruption investigation involving the company (see World Grain Update, page 53).