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Nutreco shares revive after dip on auction failure

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Nutreco shares rebounded after the feed group followed up the announcement of its failure to sell its Spanish and Portuguese feed and meat business with the unveiling of its annual share buyback.

The Dutch-based company said it would today begin its process of purchasing shares to cover stock dividends and employee stock plans, aiming to purchase 1.40m shares at a cost of about E45m.

The announcement of the buyback - which broke the company's usual tradition of purchasing shares around February and March - followed a decline in the stock price on Wednesday after Nutreco revealed it had been unable to agree a sale of its Iberian meat and feed portfolio.

The failure of the sales process, coupled with concerns over raised capacity by rival Biomar in the fish feed market, prompted KBC analyst Pascale Weber to lower to "hold" from "buy" her rating on Nutreco shares.

'No fair valuation'

Nutreco blamed its inability to sell the Iberian assets - which include Nanta, with a 13% share in the region's compound feed, and Sada, with a 26% share of the Spanish poultry meat market – on an inability to obtain a satisfactory offer.

Talks with "several" prospective buyers indicated that "no fair valuation could be obtained" for the businesses.

"Nutreco continuously operated with the clear intention that any valuation for the businesses should reflect their market-leading positions, solid financial results and future potential," the group said.

The businesses, which recorded a profit of E23.3m last year, on revenues of E1.4bn, will be retained in Nutreco as a separate division.

Shareholder sweeteners

It is not uncommon for companies to unveil buybacks or dividend rises after an announcement which could be deemed disappointing, although the scale of the repurchase by Nutreco, which has 70m shares listed, is relatively small.

Archer Daniels Midland, the US agribusiness giant, followed up November's failure of its GrainCorp takeover bid, which was blocked by Australian officials, with a 26% dividend rise.

However, a Nutreco spokesman said that while the buyback's timing was linked to the end of the auction of the Iberian assets, it was because the process while active prevented the group, under stock exchange rules, from purchasing its own shares.

Furthermore, some investors had suggested the group be less "mechanical" over the timing of its buybacks, rather than just begun purchases in February, the spokesman told

"We will probably continue this practice for coming years," he added, referring to a more liberal buyback schedule.

Nutreco shares stood 2.2% higher at E31.98 in late deals in Amsterdam.


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