ANZCO is now 100% Japanese owned

One of Japan’s two largest meat processing and marketing companies, Itoham Yonekyu Holdings, has received OIO consent to increase its shareholding in ANZCO Foods from 65% to 100%. It will acquire the shares currently held by ANZCO’s management (18.24%) and Japanese food company Nissui (16.76%) as a carefully planned transition which will see founder and chairman, Sir Graeme Harrison, retire at the company’s AGM in March.

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ANZCO’s profit disclosed in Itoham’s statement

Japanese food company Itoham Foods announced last week an increase in its shareholding in New Zealand meat processor and exporter ANZCO Foods from 48.28% to 65%. As a result of the transaction it will be able to consolidate ANZCO’s revenues and earnings into its annual accounts.

 

$40 million worth of shares are being bought from three entities: another leading Japanese food manufacturer Nippon Suisan Kaisha, chairman Graeme Harrison, and JANZ Investments, owned by Graeme Harrison and ANZCO staff members. The sale will see the minority shareholders reducing their shareholdings on a pro rata basis with Harrison’s effective holding falling from approximately 20% to 14%.

 

A side effect of the announcement to the Tokyo Stock Exchange was the disclosure of ANZCO’s annual result for the 2014 year which would not normally be announced to the Companies Office until late March. This demonstrates a small drop of $25.6 million (1.92%) in sales, but a two thirds reduction in operating income and a $6.2 million or 50.8% fall in net profit. This fell from $12.22 million to just over $6 million.

 

The figures do not give any details of the reasons for the profit reduction, although a 9.4% increase in total assets suggest an increase in inventories may be a factor. The profit represents a 0.48% return on sales and 2.7% on net assets which is less than ideal, albeit a continuation of ANZCO’s track record of posting a profit, apart from 2012 when the whole meat industry lost money.

 

The main question is why Itoham has decided to increase its ownership percentage in a New Zealand meat exporter now when it has been content to remain a fairly passive shareholder since 1995 when Harrison put together a consortium of investors to buy ANZCO from the Meat Board and Huttons Kiwi.

 

The answer appears to be a combination of factors, notably Harrison’s stated intention to retire at an appropriate time presumably in the relatively near term. In 2009 Mitsubishi Corporation became Itoham’s largest shareholder which can now access 28,000 staff in Mitsubishi’s Living Essentials Group involved in all stages of the distribution chain throughout the world with a focus on emerging markets.

 

Itoham’s announcement to the Tokyo Stock Exchange signals its intention to grow its business outside Japan by becoming “the most trusted manufacturer of processed meat in Asia”. Itoham’s investment with ANZCO is seen as an integral step to achieving this goal. ANZCO is seen as an ideal platform for expanding red meat sales to the world’s growth markets which contrasts with Itoham’s previous focus on the Japanese domestic market for sausage and processed meats.

 

Correspondingly the main business focus of Nissui which also bought its shares in 1995 is on marine products including a 50% shareholding in Sealord, processed foods and chemicals. Therefore its holding in ANZCO is less aligned with its core businesses.

 

At this point there will be no change to ANZCO’s board of directors or management with Graeme Harrison and Mark Clarkson remaining as Chairman and Managing Director respectively. In time it seems inevitable that consolidation of ownership and retirements will result in further changes.

ANZCO releases annual profit four months earlier than necessary

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ANZCO Foods posted an after tax profit of $12.2 million for 2013, citing rumours as the reason for getting the announcement out to the market in advance of the legal requirement. The company usually leaves it to the last minute with the result being posted on the Companies Office website at the end of March or early April.

Not sure it’s realistic for farmers to own the meat industry

There is a lot of noise about the dysfunctional or broken meat industry accompanied by the suggestion it would be solved if farmers owned a bigger slice of it.

 

The Meat Industry Excellence group has been touring the country since earlier this year, holding farmer meetings and trying to drum up support for fixing the industry’s problems. In total some 3,000 farmers attended meetings from Gore to Gisborne which, even if every attendee was firmly in support, only represents a maximum of 20% of sheep and beef farmers.

Farmers need to agree what they want

The recent meeting in Gore, organised by the Meat Industry Excellence Committee and attended by about 1000 farmers, gave an overwhelming mandate for change to the present condition of the meat industry.