Aarhus investor sells majority stake
stakeholder in vegetable oil firm Aarhus United, confirms it will
sell its considerable stake in the Danish firm, due to be divested
by January 2005.
The move confirms reports in August that UIE was looking at selling its 45.6 per cent chunk of cocoa butter replacer Aarhus, citing a potential difference in long-term investment interests and claiming a new partner might better serve Aarhus.
In addition to UIE, a pension fund owns over 10 per cent of Aarhus, and a further fund has 5 per cent, while private investors make up the remaining approximate 40 per cent.
Industry rumours suggest that Swedish fats firm Karlshmans could be interested in picking up the UIE slice, although Karlshamns announced job cuts this week.
It is also possible that US ingredients giants ADM or Cargill - currently driving deeper into the European market - might be interested in buying the shares in Aarhus United.
Earlier this year results for the fats and oils firm were hit by a cut in demand from the food industry for bulk oils, declining exchange rates that shaved margins and higher raw material prices.
But Aarhus said this week that revenue is expected to be 'marginally higher in 2004 than the DKK4.5 billion in 2003' based on unchanged raw material prices and higher sales volumes.
In March Aarhus had warned investors that an 'efficiency programme' had been built into the firm's strategy for 2004-2006 to carve a deeper position in the chocolate market, due to the disappointing results for 2003.
"In order to meet the highly intensified competition, the strategy will place increased emphasis on measures to enhance cost efficiency. This will involve both short and long-term cost optimisation," said the company in a statement. It has since cut 24 jobs.
Aarhus has seen a disappointing take-up of cocoa butter replacers, despite the new chocolate law cleared in 2003 by the European Union that states up to 5 per cent of cocoa butter in chocolate may be replaced by vegetable fats and still qualify as chocolate.
The rules opened up the market for CBE (Cocoa Butter Equivalents) sold by companies like Aarhus United and Swedish firm Karlshamns because vegetable fats are cheaper to use than cocoa butter, enabling manufacturers to slice a considerable sum off production costs when using a cocoa butter replacer.
