Plimsoll study highlights areas of concern for abattoir owners

A NUMBER of issues affecting the UK abattoir industry have been identified in a new study which aims to help owners and managers in the sector who are looking to buy or sell a company.

Industry analysts at Plimsoll Publishing, who conducted the research, said current owners were being forced to consider their future involvement in the market.

Issues included the age of abattoir owners, with a third of directors now over the age of 60; the direction of the market and the pressure on profitability as a result of rising costs. However, there were examples of companies which were new or prospering, with 32 companies improving sales by 15 per cent or more in the last three years and four of the 31 companies established in the last 10 years now reaching sales above £5 million.

David Pattison, senior analyst at Plimsoll, said: "This effective two-speed industry is forcing some to feel like the market is in decline and that selling up or merging is a great way to save the company.

"On the flip side, the other companies grabbing all the growth and profit see an acquisition as a great way to continue their march into the market."

As well as a full individual analysis of each of the UK's Top 140 companies, Mr Pattison said two types of company were identified. He said if someone was looking to sell their company or merge the 71 "buyer" companies should be considered because they showed great financial strength. He said the 56 "seller" companies should be considered if someone was looking to buy a company because they were likely to be amenable to an approach as many were losing money. However, he added, in the analysis each of these companies' projections sees them returning to profit inside 12 months.

Speaking for the Association of Independent Meat Suppliers (AIMS), Norman Bagley, said that in the independent sector it was not usually the case that companies were bought or sold, because they tended to be family businesses that were handed down through the generations. "In the last 15 to 20 years, yes there has been a significant amount of abattoirs that have closed but the businesses didn't close, they sometimes extended, into cutting plants for example."

He said with future regulations looking less prescriptive and British beef export markets re-opening, the sector was well placed, if not better than others, to embrace future challenges.

A spokesman from the British Meat Processors Association (BMPA) was not available for comment as the Journal went to press.