Wiesenhof increases turnover at home and abroad

PHW Group: Growth in all divisions / turnover rises 4.4 percent to €1.19 billion / investments total €45.6 million / Animal Welfare Award for free range chickens / unit sales of organically reared chickens stagnate / TAD Pharma GmbH achieves double-digit growth with its generics

Rechterfeld/Hamburg, 14 February 2005. Germany‘s leading poultry brand, „Wiesenhof“ has once again recorded an increase in turnover. Furthermore, all the other business sectors of the PHW Group, which is based in Rechterfeld, also achieved growth in the 2003/2004 fi nancial year (30.6.), and in some cases the growth rate was substantial. Overall, the consolidated total turnover, adjusted for internal sales, rose to €1.19 billion (previous year: €1.14 billion). This represents an increase of 4.4 percent, or €50 million.

In the financial year ended, Wiesenhof recorded 3.2 percent sales growth, to reach €717 million (previous year: €695 million), and further expanded its leading market position in Germany. The Animal Nutrition and Animal Health division almost reversed the previous year’s fall in sales, achieving a turnover of €321 million (previous year: €304.7 million). The trend in the Human Nutrition and Healthcare sector was also pleasing, with a 9.9 percent increase in turnover to a new level of €65.9 million (previous year: €59.7 million). The “Breeding and Rearing” division was similarly successful with a total turnover of €49 million (previous year: €45 million), which represents growth of 8.8 percent.

Staff levels remained stable, as in the previous year. Group employees numbered 3,843 during the fi nancial year ended, compared to 3,855 in 2002/2003. 

Stated origin and quality concept has a very positive effect on foreign trade

The Wiesenhof brand benefi ted from the continuing growth in popularity of poultry meat. According to provisional data from the ZMP Central Market and Price Reporting Agency for Agriculture, Forestry and the Food Industry, Germans consumed 18.5 kg of poultry per head in 2004, compared to 18.2 kg in 2003. However, demand in the EU is signifi cantly higher at 23.3 kg, indicating that there is still considerable potential for a further increase in the medium term. 

In its production and marketing operations, Wiesenhof employs a transparent stated origin and quality concept that is unique in the industry. It is implemented in collaboration with some 700 partner farmers and producer associations. The production process operates on the “single source” principle. All the “Wiesenhof” production stages are located in Germany. The farms that rear the birds are named on the label of origin. The feed from the Group’s own feed mills has been guaranteed free of animal proteins since 1996, and since 1997 free of antibiotic performance enhancers. In addition to this, “Wiesenhof” is the only European supplier to guarantee verifi ably that the feed from its own mills contains no genetically modified soya and is also produced free of salmonella. The brand’s “non-GMO policy”, in particular, has recently won respect at both national and international level. Germany’s environmental protection organisation, “Bund für Umwelt- and Naturschutz”, and “Neuland”, an association that actively promotes humane and environmentally sound methods of husbandry, also recommended Wiesenhof products. The self-contained production process and the guarantee of salmonella-free feed were important factors that helped Wiesenhof to achieve major growth in its export business. In total, Wiesenhof International GmbH & Co. KG doubled its volume of exports, measured in terms of sales by value.

“Wiesenhof”: Poultry sausage in demand; organically reared chickens stagnate 

Apart from the positive export trend, the other factor behind the growth recorded by the Wiesenhof brand was an increase in sales of new product ranges, such as poultry sausage. In this product field, turnover rose by 21.5 percent to just under €25 million. In contrast, as in the previous year, sales of organic chickens, which are reared on a free-range basis by farmers in Bavaria and Lower Saxony, stagnated. Similarly, the free range chickens from Wiesenhof failed to reach a satisfactory level of sales even though they enjoy a positive public perception. In October 2004, the Bavarian Ministry of Consumer Protection presented the Animal Welfare Award to the farmers who produce pastured chickens exclusively for Wiesenhof. In the words of Paul-Heinz Wesjohann from the PHW Group management, which also comprises his son, Peter Wesjohann, and Harm Specht: “In the case of our Wiesenhof brand, it is apparent that quality and brand promise continue to be of great relevance here in Germany, whilst aspects such as organic and free-range husbandry play a minor role from the consumer’s perspective.”

Overall, development of the “Wiesenhof” business sector was infl uenced by higher expenditure on feed. Mixed feed prices rose in the 2003/2004 fi nancial year by up to 25 percent due to a Europe-wide shortage caused by unfavourable weather conditions. As feed accounts for 60 percent of all costs involved in poultry production, these price increases had a noticeable negative effect. At the production level of hatching-egg production and rearing material costs increased signifi cantly as well. However, it was not possible to pass on the increased costs to the consumer. The trend was similar in the case of turkey meat: after a pleasing second half of 2003, wholesale prices for turkey meat came under severe pressure from eastern European imports as from May 2004.

The poultry industry: Price dumping from non-European imports

The PHW Group takes a very critical view of the continuing strong pressure exerted by imports from non-EU countries, such as Thailand and Brazil, although in 2004 avian influenza meant that Thailand could be disregarded almost entirely as a principal exporter of poultry meat. Price dumping in Germany due to imports is an impediment to achieving the target of highest possible product and production quality, in the view of Paul-Heinz Wesjohann.

In order to expand its international business, the PHW Group has intensified its activities in Poland. In addition to the poultry processor Drobimex, located in Stettin, which contributed €39 million to the PHW Group’s total turnover, the Group acquired a 50 percent stake in Bomadek GmbH, a turkey slaughtering and processing company based in Trzebiechów (Poland), in October of last year. In terms of the quantity of birds slaughtered, namely 6,000 to 7,000 per day, Bomadek is the number 2 in the Polish market.

Furthermore, during the current fi nancial year, the PHW Group strengthened its market position in the duck segment by taking over the hatchery, Duck Tec Brüterei GmbH in Belzig (Brandenburg). Together with the slaughterhouse operation in Grimme (SaxonyAnhalt), which has operated under the name WIESENHOF Entenspezialitäten GmbH & Co. KG since February 2005, WIESENHOF has adopted the “single source” principle here too.

2003/2004: Investment totalling more than €45.6 million 

Following the €52.5 million in the 2002/2003 fi nancial year, the PHW Group invested a total of €45.6 million in the fi nancial year ended. Of this sum, €25.4 million went to the production plants of the “Wiesenhof” brand. The largest single investment item was the expansion of convenience products at the Lohne and Zerbst locations. At Lohmann Animal Health GmbH & Co. KG, the PHW Group invested €3 million in the expansion of the vaccine production plant located in Cuxhaven, following on from the €8.7 million already invested the year before. Expenditure on research and development rose once again: in the fi nancial year ended, it totalled some €9.5 million (previous year: €9.4 million), of which the PHW Group earmarked almost €4.5 million for the development and marketing authorisation of new pharmaceutical products at TAD Pharma GmbH alone. Expenditure on the development and marketing authorisation of vaccines at Lohmann Animal Health GmbH & Co. KG amounted to €3.6 million. 

TAD Pharma GmbH achieves double-digit growth with its generics

The generic drugs producer, TAD Pharma GmbH (Cuxhaven), which belongs to PHW’s Human Nutrition and Healthcare division, increased its turnover during the financial year ended by 11.3 percent to €48 million (previous year: €43 million). A major role in this success was played by the considerable growth in the export business (up by €2.4 million) and the market launch of 15 new products. The result was, however, negatively affected by Germany’s “Health System Reform Act” and by the fact that the compulsory manufacturer discount, which pharmaceutical companies are required by law to grant to statutory health insurance providers, was raised from 6 to 16 percent. TAD Pharma is aiming to continue its excellent performance by making improvements on the purchasing side and by further expanding its international business.

Nutrilo Gesellschaft für Lebensmitteltechnologie mbH (Cuxhaven), which specialises in the production of vitamin mixes for the food industry, increased its turnover by 6.2 percent to €17.3 million (previous year: €16.3 million) during the year under report. This growth resulted from the higher level of exports (9 percent up on the previous year), which now account for 25.5 percent of the company’s sales. 

Animal Nutrition and Animal Health division achieves 5.4 percent growth

The Animal Nutrition and Animal Health division also reported extremely pleasing results for the 2003/2004 financial year: total turnover for the division was up by 5.4 percent at €321 million (previous year: €304 million). This was due principally to MEGA Tierernährung GmbH & Co. KG, which increased its sales to €185 million (previous year: €163 million). MEGA is one of Germany’s leading mixed feed makers and achieved an output of 750,000 tonnes at its three production locations, Rechterfeld, Haldensleben and Straubing. Lohmann Animal Health GmbH & Co. KG (LAH), which specialises in the production of feed additives and poultry vaccines, also recorded growth in sales revenue, at €127 million (previous year: €126 million). LAH is regarded throughout the world as the market-leader in salmonella vaccines; in the fi eld of feed additives, LAH gained market share in Europe during the fi nancial year ended. 

PHW Group considers further internationalisation 

In spite of the severe pressure on prices due to imports, the PHW Group will not be deterred from its uncompromising quality policy. As a full-range supplier of poultry – from chickens through to turkeys and ducks – the company will fully utilise the potential of the Wiesenhof brand and further increase its sales by adding new seasonal convenience products and poultry sausage varieties to its range. 

In addition to emphasising the quality aspect of the brand profile, the PHW Group will also be pursuing the internationalisation of production and sales on the basis of European process quality. Paul-Heinz Wesjohann: “The German poultry industry, and Wiesenhof in particular, is unrivalled anywhere in the world when it comes to quality, animal welfare, consumer information and technology. We aim to utilise this leading position as the basis of our continued expansion.”

Even in the face of increasingly fierce competition in the poultry industry, and also political uncertainties, the PHW Group expects to achieve further growth in the current financial year.