Pet food chief in firing line
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Your support makes all the difference.Richard Clothier, the chief executive of Dalgety, is expected to come under pressure this week to find a radical solution to the underperformance of the Spillers flour to Winalot pet food business or face calls for his resignation.
The food products group, now best known for Felix cat food, is expected to reveal plans tomorrow to sell its ingredients division when it releases its latest figures. The division includes the old Spillers flour-milling business and also makes coatings like breadcrumbs for Marks and Spencer's chicken kievs.
The business could fetch up to pounds 200m according to analysts and would appeal to Garry Weston of Associated British Foods though Mr Weston might face monopoly problems in the UK milling market.
"Weston has 30 per cent of the market with Allied Mills," said John Parker of NatWest Securities. "Maybe he could get Dalgety's ingredients business, maybe he couldn't."
The disposal follows a lengthy review of the entire company by consulting firm Bain, which was brought in by Dalgety's new chairman, Sir Denys Henderson.
In July, the ex-ICI boss revealed another profits warning for the year to June, adding that the results "are unacceptable " and that "shareholder value must be restored."
Crisis has followed crisis at the group. Last year profits were savaged by the BSE scare, which hit Dalgety's exports of pet foods and also cut demand for animal feed.
The shares, 480p in September 1995, are now just 274p, despite recent rumours of a takeover bid.
Investment banks such as ING Barings failed to find a bidder for the entire group and had to look for buyers for unwanted divisions. "They're under pressure to do something and show they are acting," said Mr Parker. He also expects Dalgety to part company over the next 12 months with Mr Clothier, the architect of the pounds 450m purchase of Quaker Petfoods in 1995.
Bain is thought to have recommended other sales including the disposal of a US warehousing operation that distributes hamburgers to McDonald's. The business distorts Dalgety's figures since it boasts a turnover of more than pounds 1bn but has tiny profit margins. Bain has also put Dalgety's specialist pig breeding company under scrutiny.
Dalgety's other main division is agribusiness, which includes animal feeds and fertilisers. Profits there have collapsed and finding buyers would be difficult. The obvious potential buyer, its rival Harrisons and Crosfield, is thought to be trying to sell its own animal feeds operation.
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