Posted on Thursday 26 August 2010 byUlster Business
Moy Park’s Nigel Dunlop (left) with O’Kane Group’s Billy O’Kane.
Poultry producer Moy Park has continued to expand with the acquisition of O’Kane Group earlier this year. Symon Ross caught up with chief executive Nigel Dunlop to find out about the company’s outlook for the coming year
One of the more recognisable names to viewers in Northern Ireland watching this year’s FIFA World Cup in South Africa would have been Moy Park.
The company’s name was plastered on hugely visible billboards around the stadiums used for many crucial matches and would have been seen by millions if not billions of football fans around the world.
However, that a company based at Seagoe Industrial Estate in Craigavon should have such a global profile should not come as a surprise.
Itself one of the leading poultry suppliers in the UK and Europe the company is owned by the world’s fourth largest food group – Sao Paulo-based Marfrig, which was an official sponsor of the World Cup and keen to promote its brands ahead of the next competition on home turf in Brazil. Marfrig, which bought Moy Park in 2008, has 92 plants in 13 nations and exports to more than 110 countries.
Founded in 1943, Moy Park is Northern Ireland largest food processing company, supplying own label and customer branded fresh chicken and cooked chicken products to retail and foodservice customers across Europe and employing almost 7000 people at 15 sites in Northern Ireland (Craigavon and Dungannon), England, France and the Netherlands.
Moy Park’s chief executive Nigel Dunlop told Ulster Business the company is meeting its objectives of generating sufficient funds to keep investing in growth.
“In the kind of business we are in, selling into the retail food sector, we tend to be operating as a fairly low margin business. But we do try to make sure that we deliver margins that allow us to continue to invest in the business. We are keen to make sure that we keep the asset base and the farming base that we have very much up to date and fit for purpose in the future,” he said.
Earlier this year the company’s size was further swelled by the acquisition of Ballymena-based O’Kane Group, a leading local rival in poultry production. The deal – conducted for an undisclosed fee – created a company with a combined turnover close to £1bn and secured the future of many of O’Kane’s growers.
Moy Park and O’Kane Poultry currently sell around 200 million chickens and 1.5 million turkeys a year, and between them have contracts with around 760 local poultry farmers. The joint company has 8,500 employees, 5,000 in Northern Ireland.
“One of the big values we saw in the O’Kane business was that it brings Moy Park firmly into the turkey market. There’s a lot of investment going on in the O’Kane business to enhance the production of turkeys and make sure there’s capacity there to meet demand. We see all that going according to plan and progressing positively,” said Mr Dunlop.
One challenge facing Moy Park in future is a potential rise in commodity prices, particularly wheat prices, which represent a large portion of its feed costs. Prices have been in an expected range for the past 12-18 months but now there is evidence of a “more fundamental shift upwards” that will have to be addressed to maintain the firm’s strong cash position, said Mr Dunlop.
“Even in the last couple of weeks we’ve seen a significant jump in underlying wheat prices throughout the world. Although this is a harvest time for many of the big producers of wheat, because it has been a hot summer, some of the yields have not come in to the extent they were expected to. Looking to the next 12 months ahead, we have to be very mindful that we’re seeing potential for a significant jump in commodity costs,” said Mr Dunlop.
“We will have some challenges but we’ve faced these challenges before. We’d be confident with the support of our strong team of working our way through them.”
Mr Dunlop believes that being part of the global Marfrig group has been positive for Moy Park and has not detracted from its primary goal of producing fresh, high quality, locally farmed chicken, as some commentators had feared when the deal went through.
“When the transaction took place and Moy Park was acquired by a Brazil-based company, the question was always in people’s minds the extent to which the business would become focused on importing products from Brazil. Actually we have seen the benefit of being part of Marfrig, because we’ve had the freedom to continue to invest in our core business and under Marfrig we have grown our fresh poultry - and therefore the farming base that goes with it - by around 20% in the last two years,” he said.
“Equally, being part of a bigger organisation, means that if our customers want to have products that are better sourced from overseas, then you have a major advantage, because we can provide a supply chain through our business which links directly back to Brazil to provide a wider range of products. One compliments the other.”
Future growth of the company is expected to be driven from both its core business of locally farmed chicken and turkey and opportunities in new markets, said Mr Dunlop.
“There’s reasonable underlying organic growth in the chicken and turkey market, just because more customers are buying chicken or the same number of customers are buying more chicken. The other source of growth will be driven by new markets and innovating where we can introduce new products,” he said.
“Beyond that we look at Europe. As part of the Marfrig group we are effectively the European division of our parent company. While we focus on our local strengths we will also be trying to develop businesses across continental Europe, either by growing organically or possibly joint ventures. We already have businesses in France and Holland so we see those as a platform for us to look at expansion opportunities into continental Europe as well.”