BSE scare eats into profits at Hillsdown

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The BSE scare on beef knocked pounds 3m off half-year profits at Hillsdown Holdings, the Typhoo tea and Chivers jam food group chaired by former defence secretary Sir John Nott. The scare resulted in cancelled orders and stock write-offs of pounds 2m. Other parts of the business, such as meat canning, were also affected.

Hillsdown's poultry businesses, which include Buxted chickens, increased sales but they were insufficient to make up the shortfall.

New Hillsdown chief executive George Greener, who replaced David Newton in July, said the European beef market remained depressed and he was not optimistic about an improvement in the medium term.

He was speaking as Hillsdown announced pre-tax profits of pounds 43.7m for the six months to June. This compared with a pounds 68m loss in the same period last year, which was caused by a goodwill write-off of pounds 142m on the disposal of its stake in Maple Foods of Canada.

Earnings per share fell as the raft of acquisitions Hillsdown has conducted since January was not enough to make up for the loss of the Maple Leaf contribution. The Hobson foods business, which was acquired for pounds 121m in January, has yet to make a contribution.

The company ruled out any large acquisitions, saying it would concentrate on integrating the five businesses acquired since the start of the year.

Chilled foods saw profits fall after a poor performance in Germany, where profits halved. The company blamed the weak German economy and pricing pressure from retailers.

The company declined to comment on whether it might sell its Fairview house-building division and its two furniture businesses in order to concentrate on food. Fairview, which builds starter homes, saw a 12 per cent increase in sales though profits fell by 10 per cent due to the higher cost of land. Hillsdown said it expected a better performance in the second half.

Commenting on the group outlook for the rest of the year, Sir John said: "There is still a long way to go but, subject to the fourth quarter on which a great deal depends, we see no reason why the encouraging trend should not extend to the full year."