Sims, which has had six profits warnings within the last eight years, has sold the business, which had a annual turnover of pounds 112m and made an operating profit of pounds 2.9m in the year to March, for just pounds 12.1m to Dawn Holdings, a private Irish group.
Its hopes of selling the business last year were dashed when the `mad cow' crises hit the headlines. Meat sales plummeted when the government acknowledged last year that infected beef was linked to human deaths.
Sims has cut its workforce at the retail division from 1,000 to 750 over the last year. A management buy out team lead David Gunner, managing director of the retail division, had sought to buy the business but lost out to Dawn Holdings. Their case was blighted by revelations earlier this year that Sims has overstated profits at one of its plants.
Sims will be left with two fast food businesses, Oakland Food and Lincs Turkeys, which supply meat for burgers outlets including Burger King and Granada. These business made operating profits of pounds 2.2m on sales of pounds 40.9m in the year to March.
However chief executive Stephen Collier said he was interested in buying other businesses although it is doubtful the company would make any acquisitions during the current year.
Mr Collier said yesterday; "What we have been looking at and will continue to look at are those areas of fast food particularly and food service generally. Typically this could mean pizza toppings, pasta, ready meals, sandwich fillings."
Sims said the deal will reduce borrowings from pounds 16m to around around pounds 5.5 m. Beef will now make up `approximately just over half' of the company's business from `something like 85 per cent' Mr Collier said.
Sims reported that trading in the first few months of the new financial year has been `mixed.' It announced a pre-tax loss of pounds 27.5m in the year to March 31 compared to a loss of pounds 49.3m last year. Its shares, which fell another 2p to 33.5p today, have slumped from a high of 98p in 1994.
Sims is looking to engineer a capital reconstruction which will enable it to resume paying dividends.
The disposal marks the end of Sims' restructuring programme which began in 1995 when the group decided to exit from the fresh red meat business fearing the business was in long term decline. It has since sold its meat trading company and refrigeration operations.Reuse content