UB disposes of Spanish operation

UNITED BISCUITS, the McVities to KP snacks group, has sold Ortiz, its loss-making Spanish operation, to a management buyout for what it says was a nominal sum, writes Russell Hotten.

UB would not disclose the price but said the disposal would mean an pounds 11.5m exceptional loss before adjustments for goodwill. Ortiz made an operating loss of pounds 1.3m in 1992.

Despite UB's rapid expansion elsewhere in Europe, Ortiz had been a drain on cash for some years and analysts welcomed the sale.

'It is in a competitive but not very exciting market and it has only performed marginally at best in the past,' Tim Potter of Smith New Court said.

The sale had been widely expected and Ortiz, which produces toasted bread solely for the Spanish market, had been small in overall group terms, he added.

A UB spokesman said the disposal would be earnings enhancing. 'Ortiz was bought when it was trendy to diversify, but it is not a core business and had been up for sale for some time,' he said.

Ortiz was part of McVities, which was the poor performer in UB's results published last month. Operating profits at McVities fell 9 per cent to pounds 36.6m on margins down from 14 to 11.8 per cent.