Stock market review
Feb. 23, 2011
by Josh Sosland
Share price performance for grain-based foods companies around the world was decidedly mixed during 2010, a year after performance was exceptionally strong. Of the 40 companies tracked by Milling & Baking News, sister publication of World Grain, 24 recorded yearover-year advances in share price while 16 posted declines. By comparison, only seven companies posted year-overyear declines in 2009.
On the London Stock Exchange, Associated British Foods finished the year at 1181p, up 44% from 822p in 2009. Operating profit during the year jumped 31% to £819 million, and for the first time total sales exceeded £10 billion. A number of capital projects were completed during the year and have begun to yield results, while several projects are still in progress and will continue to drive the group’s growth as they come on stream, notably the restructuring of the company’s meat business in Australia, sugar capacity expansions in southern Africa and the building of the Vivergo biofuels plant in the United Kingdom.
Northern Foods PLC, a miller and a major manufacturer of private label foods, finished 2010 at 62.75p, down 6% from 66.8p a year earlier. In mid-November, Northern Foods and Greencore Group PLC agreed to a merger that would create a powerful player in the ready-made food industry, with combined annual sales of around £1.7 billion. The transaction will create a business called Essenta Foods, and will be headquartered in Dublin, Ireland, with an operational center in Yorkshire, England, the companies said. Earlier in 2010, Northern Foods reached agreement to sell Dalepak Frozen Foods to the Irish Food Processors Group for an expected cash consideration of £6.4 million. Dalepak, based in Northallerton, North Yorkshire, is a supplier of frozen food products, including meat and meat free grills.
Carr’s Milling Industries PLC closed at 630p, up 49% from 422.5p in 2009. Chairman Richard Inglewood said the company strengthened its agricultural businesses in Scotland and the North of England through the acquisitions of Ag Chem (U.K.), Scotmin Nutrition Ltd. and A C Burn Ltd.
Tate & Lyle PLC, the global sweetener company, was weak earlier in the year, sinking to a 52-week low of 388p before rallying 34% from that level, closing at 518p, up 20% for the year. During 2010, Tate & Lyle announced the disposal of its E.U. sugar refining operations, and launched processes to sell the remaining businesses within its sugars division, principally molasses and Vietnamese sugar. In early December, the company completed the sale of molasses to W&R Barnett Ltd. for £67 million payable in cash, subject to closing adjustments for net cash and working capital. The proceeds will be used to reduce Tate & Lyle’s net debt.
Premier Foods, the U.K.’s largest food producer, finished 2010 at 19.28p, down 46% from 35.7p in 2009.
Finsbury Food Group P.L.C., a U.K.-based maker of cake, bread and glutenfree bakery goods, finished 2010 at 23.50p, up 9% from 21.56p in 2009. In late December Finsbury expanded its joint venture agreement with Genius Foods Ltd. to include the introduction of additional gluten-free products to be sold under the Genius brand.
Two of the three leading U.K. retail chains sustained share price declines in the past year. Tesco, the leader in U.K. food retailing, closed at 425p, down narrowly from 428p a year earlier. Marks & Spencer, meanwhile, finished the year at 369p, down 8% from 402p. The lone gainer was J Sainsbury, PLC, which finished the year at 376.3p, up 16% from 323.5p in 2009.
In Ireland, Greencore Group PLC, a European maker of convenience food and malt products, finished at €1.27, down 9% from the 2009 close of €1.39. Greencore in early December acquired On A Roll Sales Inc., a manufacturer of fresh sandwiches, wraps, calzones, salads and ready-to-eat meals and based in Brockton, Mass.
Kerry Group finished the year at €24.97, up 21% from €20.58 at the end of 2009. Late in the year the company reached agreement to acquire the Croissant King and van den Bergh’s frozen bakery businesses in Australia from General Mills, Inc., Minneapolis, Minnesota, U.S. The purchase includes two plants located in Mansfield, Queensland, and Camellia, New South Wales.
Origin Enterprises ended 2010 at €3.20, up 50% from €2.13 at the end of 2009. Origin Enterprises PLC, a food and agribusiness group based in Dublin, this past year joined CapVest Ltd., a London-based mid-market private equity firm, in forming Valeo Foods Group Ltd. Newly formed Valeo has agreed to acquire the branded food business of Origin as well as the Irish food company Batchelors.
In Australia, GrainCorp Ltd. closed the year at A$6.60, up A$0.40, or 6%, from the 2009 close of A$6.20, while Goodman Fielder Ltd. finished 2010 at A$1.345, down 17% from A$1.63 in 2009. Goodman Fielder Ltd. and Cargill on Nov. 12 agreed to terminate a transaction agreement that would have given Cargill the commercial edible fats and oils business of Goodman Fielder for A$240 million.
AWB Ltd., which closed 2009 at A$1.13, was suspended from trading on Nov. 19, 2010, and officially removed from the list on Dec. 10, 2010. At the time of its suspension, AWB shares were trading at A$1.495. AWB was acquired by Agrium Inc. in December at a purchase price of A$1.236 billion.
In France, Groupe Danone SA, the country’s largest food and beverage company, closed 2010 at €47.02, up 10% from €42.83 in 2009. The company in late November reached agreement to acquire Portland, Oregon, U.S.-based frozen yogurt maker Yo-Cream International Inc. for $103 million. Earlier in 2010, Danone formed a joint venture with Chiquita Brands International , Inc. to market fruit beverages based on Chiquita’s Just Fruit in a Bottle product line in Europe.
In The Netherlands, Unilever, the Anglo-Dutch food and personal products business, closed 2010 at €23.80, up 4% from €22.78 per share in 2009.
Ahold, the Dutch-based company with global food retailing and food service operations, finished the year at €9.88, up 7% from €9.26, while DSM, the Dutch chemical company with food ingredient interests, rose 23% for the year, closing at €42.6. CSM, the Dutch company with a strong presence in baking ingredients in North America and in Europe, also finished sharply higher, ending up 42% at €26.19. CSM Bakery Supplies North America on March 19 completed the acquisition of Best Brands Corp. Accordingto CSM, the majority of the Best Brands business will be integrated into its Tucker-based H.C. Brill division. With the acquisition, the CSM Bakery Supplies North America business will have annual sales topping $2.3 billion.
In Switzerland, Nestle SA, the world’s largest food company, closed at 58.82 Swiss francs, up 17% from 50.20 Swiss francs in 2009. Nestle took many important steps in 2010, but perhaps leading the way was the March purchase of Northfield, Illinois, U.S.-based Kraft Foods Inc.’s frozen pizza business.
Aryzta AG closed 2010 at 43.15 Swiss francs, up 12% from 38.55 Swiss francs in 2009. Aryzta delved deeper into U.S. baking with the acquisitions of Fresh Start Bakeries and Great Kitchens for a combined $1.08 billion in two separate transactions that are expected to double the Swiss-based company’s manufactured volumes. Aryzta also completed the acquisition of the 50% interest in Maidstone Bakeries from Tim Hortons for C$475 million. Maidstone Bakeries provides Timbits, donuts, pastries and certain bread products for the Tim Hortons restaurant system.
Danisco A/S in Denmark rose 46%, closing at DK510 after finishing at DK348.5 in 2009. The company said its sweeteners business benefited from initiatives focused on capacity reduction at certain sites and efficiency measures resulting in staff deductions.
Share price movement in Japan was mostly downward. Nisshin Seifun, the Japanese holding company that includes Nisshin Milling, Japan’s largest flour miller, closed at Y1031, down 18% from Y1256 a year earlier, while Nippon Flour Milling fell 13% for the year, closing at Y402, and Nissin Food Products, a leading manufacturer of instant noodles, fell 4%, closing at Y2910.
Baking leaders Yamazaki Baking and First Baking also trended down in 2010. Yamazaki closed at Y979, down 11% from Y1101 in 2009. First Baking, meanwhile, finished at Y94, down 22% from Y121 in 2009.
Indonesia’s Indofood, one of the largest food producers in Asia, continued to move upward, following up a 282% gain in 2009 by rising 37% in 2010 to R4875.
In South Africa, Tiger Brands Ltd. posted its second straight year of gains, finishing up 14% at R19363. The increase followed a 19% gain in 2009.
Egyptian companies engaged in flour milling mostly were lower with the exception of Middle and West Delta Flour Co., which rose 13%, and East Delta Flour Co., which was up 9%. Egyptian Starch fell 17%, while Upper Egypt Flour was down 17%, Alexandria Flour was down 14%, South Cairo & Giza Flour Mills fell 14%, Middle Egypt Flour was down 4%, and North Cairo Flour fell 4%.
In Africa, Flour Mills Nigeria PLC soared 111%. Flour Mills Nigeria is primarily involved in flour milling, pasta production and cements production.
In Spain, Ebro Puleva S.A. shares rose 9% to €15.83 from €14.53. Ebro, which is the parent of Riviana Foods Inc., in December detailed plans to build a new facility in Memphis, Tennessee, U.S., that will produce ready-to-serve, microwavable rice products under the Minute Rice brand. The ready-to-serve rice plant will be integrated into Riviana’s 400,000-square-foot processing and packaging plant in Memphis. Additionally, Riviana is in the process of consolidating operations from its Houston and former Memphis plants to the new facility. That transition is expected to be completed by the end of the first quarter of 2011.
In Chile, Quinenco closed the year up 58%. Molinos Rio Plata in Argentina closed up 135% from its 2009 finish.