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Nutreco eyes deals as Europe feed unit recovers

Published on 29 October, 2009, Last updated at 09:12 GMT

Nutreco set the stage for acquisitions, and expansion into new countries, as it forecast a rebound in its fortunes fostered by return to profit in it European animal feed division.

The group, which is digesting the purchase of two Iberian feed businesses from Cargill, said it was prioritising deals which would strengthen its share of the Canadian, Dutch and Spanish markets.

Nutreco also said it would focus on "new geographic regions and markets", highlighting potential global demand for its livestock feeds.

"Farmers everywhere in the world face the challenge of achieving greater productivity from limited resources while improving the health status of animals and reducing the impact on the environment," Wout Dekker, the Nutreco chief executive, said.

"It is a major opportunity for Nutreco to address these challenges."

'Stronger mode'

The comments came as the Dutch group forecast that underlying profits, as measured by earnings before interest tax, and amortisation, would come in 10% higher in the second half of 2009 than a year before.

"After a challenging start of the year, we see that the results are now in a stronger mode and we have confidence this will continue in the remainder of the year," Mr Wout said.

"The overall demand for feed is increasing."

While the group reported an 8.9% slide to E1.21m in revenues in the July-to-September period, this reflected in the main a slide in raw material prices, which was passed on to customers, at its European livestock feed division.

"The [division's] operational results in the third quarter are profitable and on track to compensate for the first-half loss," Nutreco said.

Investor reaction

The data received a mixed welcome, with Icap viewing them as "in line".

"Nutreco is trading on undemanding multiples... but with no immediate catalyst to lift near-term earnings visibility we reiterate our negative stance," the City broker added.

However, analysts at KBC Securities in Belgium viewed the outlook as "comforting" and retained an "accumulate" rating on Nutreco stock.

The shares closed up 0.6% at E34.60 in Amsterdam.


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