Deal or no deal?

Dutch food giant Vion remained tight-lipped on its rumoured purchase of the UK’s Grampian Country Food Group - a deal reportedly worth £350M - as it posted improved trading results for 2007.

In 2007, Vion Food Group achieved net profits of euro 126M on a turnover of euro 7.1bn - a 55% improvement on 2006 - despite turnover falling by 3.7% as a result of lower meat prices. It operates in three core sectors: ingredients, fresh meat and convenience.

When approached by Food Manufacture​ about a possible Grampian acquisition, a company spokesman said: “We only communicate when an acquisition is finalised.”

The deal would make sense for Vion by providing it with chicken production facilities for the UK market, seen as a key area for future growth. Grampian processes around 3M chickens a week, as well as large volumes of red meat and pork.

Reporting on its results, Vion said it expected production costs for the group to increase during 2008. It would not always be able to be pass on these increased costs, it added, as the supply-demand imbalance in the meat sector in particular maintained pressure on the market.

The group expected its Convenience division to grow over the coming year, with its UK subsidiary J&J Tranfield - a multi-site operation producing breakfast sausages and pizzas for retail and foodservice - performing well.

However, while retail sales volumes for the division grew last year, margins came under pressure, it said. Operating profit for the division rose from euro 28M in 2006 to euro 51M last year, thanks in part to the acquisition of a 76% shareholding in Tranfield.

Vion Fresh Meat focuses on the production of fresh pork, beef and lamb. Its operating results suffered last year from poor market conditions. In spite of cost reductions and business restructuring, profits fell from euro 86M in 2006 to euro 81M in 2007.