Matthews wins turkey wars
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Bernard Matthews, king of the turkey producers, is cashing in on the increasing reluctance of health-conscious consumers to eat red meat.
Sales to Germany have doubled in the past year as fears over BSE, the so-called mad cow disease, cut a swathe through red meat sales there. Bernard Matthews, chairman, said consumption of red meat in Germany had halved in the space of 18 months.
Events have confirmed the astute timing of the group's purchase of Turners Turkeys from Unigate in January 1994.
Turners has helped to spearhead Matthews' advance into Europe, with Germany alone now representing between 4 and 5 per cent of total group sales, which shot from £195m to £284m in the year to 1 January.
"Red meat consumption has been going down and white meat consumption has been going up," Mr Matthews said, "and this is not just in the UK but right across Europe and even in America."
Profitability in Matthews' small red meat division has been hit, but not severely enough to prevent the group`s advance to record profits last year. The pre-tax total soared from £11.3m to £18.6m, including a £5.9m contribution from acquisitions, the majority of which was from Turners.
The shares bounced 11p to 114p on the news.
The group shrugged aside the "turkey wars" fought out between the supermarkets before Christmas, which saw prices sinking below 30p a pound in some outlets.
Mr Matthews said the company had sold the vast majority of its whole birds under contract before the end of September. Losses at the store chains were likely to have run into millions of pounds, he estimated.
Matthews' growth last year was led by sales of cooked products including smoked and honey-roast meat and "dinosaur roll" aimed at children.
Mr Matthews would not give precise figures, but said this growth had been ahead of both the market and the 10 per cent uplift in sales of added- value products, which include turkey steaks and sausages.
Earnings per share jumped from 6.27p to 10.32p and a final dividend of 1.82p raises the total payout for 1994 by 26 per cent to 3.14p.
Michael Landymore, food analyst at brokers Henderson Crosthwaite, is now looking for profits to top £20m this year.
He said Matthews had lifted turnover off a plateau. "Sales were stuck in the £130m to £140m region, but in the last couple of years it has doubled turnover." He predicted 1995 would be another good year for the company.
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