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Bird flu blamed as chicken company sees sales fall

Oscar Rousseau

By Oscar Rousseau+

01-Mar-2017
Last updated on 01-Mar-2017 at 12:57 GMT2017-03-01T12:57:41Z

Avian influenza, loss of exports markets and a fall in prices hit Duc's top-line performance
Avian influenza, loss of exports markets and a fall in prices hit Duc's top-line performance

French chicken producer Duc saw turnover decline last year as the French avian influenza (AI) battle saw the company shut out of key export markets, China and South Africa.

Outbreaks of AI in France had a marked impact on the financial performance of Duc last year. The company posted full-year turnover of €165.38m, down 8% on the same period in 2015, according to its unaudited financial results to 31 December 2016.

France has culled hundreds of thousands of farm birds in recent months as the country, alongside 17 European nations, continues to fight the contagious H5N8 AI strain , first detected in mid-October.

Duc said the nasty AI strain had “significant consequences” as key export markets, such as China and South Africa, banned French poultry imports . Bereft of two big markets, Duc accumulated a surplus of chicken products that it struggled to offload elsewhere.

‘Disturbed’ market

This was compounded by a “very sharp fall in prices” for other poultry products.

While the firm’s top-line growth was dented by AI and falling prices, anti-meat campaigns also took their toll. Duc claimed operational activity was “greatly disturbed” by media campaigns “devaluing” meat consumption. It added that consolidation of companies involved in the production of similar foodstuffs created more competition in the market.

To turn the struggling business around, towards the end of 2016 Duc entered into negotiations with its main creditor, Netherlands-based Plukon Food Group , to ensure its “financial sustainability”.

Plukon Food Group’s subsidiary, Aurelia Investments BV, now holds 97.7% of the share capital and voting rights of Duc.

The move saved 802 employees at Duc, all of whom have been guaranteed work for four years on a permanent contract. Significant write-offs by Duc’s main creditors have also been carried out.

Aurelia Investments has also committed to invest €20m over three years to increase Duc’s poultry production and improve industrial efficiency.

Duc’s board of directors has also voted to appoint Peter Poortinga , CEO of Plukon Food Group, as chairman of the board of directors at Duc.

Aurelia Investments is expected to file a tender offer for all of the outstanding Duc Group shares it does not own, listed on Euronext Paris, in the coming weeks.

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