Macduffnewsmall

Acquisitive Macduff expanding China, US sales in drive to hit £100m turnover

Wednesday 1 July

 

Macduff Shellfish Group is in the process of expanding its US and China sales as part of a plan to hit £100 million in turnover in three years.

The acquisitive UK fishing and processing firm, which announced a deal for four scallop vessels and a shellfish trading business on Thursday, is expanding its supply through deals and financing other vessels so it can up sales to China and the US, said Roy Cunningham, managing director.

At the same time, Macduff, which specializes in scallops, langoustines, whelks and crabs, does not want to expand to new markets without keeping its core European customers satisfied, said Cunningham.

In order to do this, the company, which has been 50% owned by London-based private equity Change Capital Partners since 2011, with founders the Beaton family holding the rest, has been adding to its fleet over the last three years.

The deal for the four trawlers from the Greendale Group takes the company’s scallop fleet to 14, following the 2013 acquisition of four vessels from Saltire Seafoods and a buyout of Scott Trawlers in 2012, adding five vessels. Macduff has also been taking equity stakes and part financing vessels, to build up the fleet in Stornoway, where it bought a processing plant from Young’s Seafood in 2012.

Macduff’s move for the Greendale Group assets, the terms of which have not been revealed, also adds a shellfish trading business specializing in sourcing whelks and live shellfish from the southwest.

“What we have done with increasing the size of our fleet; increasing our whelk access; and a crab season that is about to kick off, all of that is aimed at continuing to service Europe, but also develop a rising demand in Asia,” Cunningham told Undercurrent News.

In order to increase sales to China, Macduff is in the process of hiring a salesperson in the market, likely to be based in Shanghai. “We are very close to establishing the first formal presence of Macduff in China, which is very exciting,” he said.

Macduff also recently announced two exclusive distribution deals in regions of the US, with Minneapolis, Minnesota-based The Fish Guys and Denver, Colorado’s Seattle Fish Co.

The company has since inked another deal with San Francisco, California-based Aloha Seafood, with more to come.

“We have set up agreements, exclusivities, if you want, with every area of the US,” he said.

The company is in talks with companies in Massachusetts and also Florida for deals.

Langoustines are the product Macduff is “kicking off” with in the US market, he said.

As with China, Macduff is prepared for the long haul. “It is going to take time, as you can’t just sell and then walk away,” said Cunningham. “Like Asia, we have spent three or four years now before we have put our sales strategy in place.”

This includes chef and sale force training and social media support. “All of this is essential in the US. With social media sites, such a Pinterest, Twitter and Facebook, these are things probably not as popular in Europe for selling, but you have to in the US.”

Even if Macduff has to tailor packaging or product form to a new market, the focus is always ultimately the same, he said. “We are always true to making a natural product.”

Hitting £100m

Macduff reported turnover of £46.21m for its latest financial year, closing Sept. 20, 2014. Gross profit was £12.40m, operating profit £3.31m and pre-tax profit was £847,200.

The company changed its year-end in 2013, meaning a like-for-like comparison with the previous year is not possible. For the 18 months to Sept. 30, 2013, turnover was £55.91m, gross profit £11.71m, operating profit £1.49m, with a pre-tax loss of £1.50m.

The business has developed considerably since the Change Capital deal, in 2011. The first year of accounts available after the deal, to March 31, 2012, show turnover of £34.96m and operating profit of £2.63m.

“Getting beyond £100m is the next reach for us. We will rapidly get to £75m now and the next target is £100m. Of course, we need to ensure that is a sustainable and a profitable £100m, of course,” said Cunningham.

At this point, the company will ideally have 50% of sales in Europe, with 25% in Asia and 25% in the US.

“So, we will have a global footprint and can manage our sales and marketing network across all three markets, which are all very different and have different demands,” said Cunningham.

In the next 12 months, the business should hit £75m, he said. “By the end of year three, we are aiming for £100m. It depends, of course, on what deals come our way.”

Nothing is in the works at the moment and the focus will be on integrating the latest acquisition, he said.

Cunningham has nothing but praise for Change Capital, the private equity founded by Luc Vandevelde, the former chairman of both Carrefour and Marks and Spencer.

“Change Capital have been a partner in the business and brought retail, finance and acquisition experience with them, but they have been very good at letting the management team run the business and develop the strategy that we have,” he said. “They have helped us access the finance to do it, as well as knowhow in retail. This is quite different from some PE-owned businesses.”

Although Change Capital has been invested since 2011, there is no talk of an impending exit plan.

“There has been no discussion or thoughts about the longevity; it is all about the strategy of how they can help more. We all view we can make this business a £100m business,” said Cunningham.

 

Read the original article here.



READ ABOUT OUR CURRENT PORTFOLIO COMPANIES IN THE PRESS