Hungarian group Bonafarm eyes stake in meat processor

Securing a new investor would enable MCS Vágóhíd to bolster its ongoing investment in constructing a new slaughterhouse in Mohács, located in Hungary’s south-west region, about 208km from the country’s capital Budapest.

Under the plan, the new pig slaughterhouse would allow MCS Vágóhíd to raise its capacity to some one million head per year. MCS Vágóhíd is controlled by Hungarian investment firm HO-ME 2000 Kft, which is run by local businessman György Nagy.

Expansion plans​

Investment cost in the project in Mohács is currently estimated to be around HUF21 billion (€68.3m). Of this, some HUF2.7bn (€8.8m), representing about 13% of the total, was provided to MCS Vágóhíd by the Hungarian government as an investment grant. However, the total represents a considerable increase on the initial cost estimate of HUF15bn (€48.8m) to HUF16bn (€52.1m).

Trial production at the facility is scheduled to be completed this March, according to local business daily Világgazdaság​.

What is noteworthy, Bonafarm’s share capital was recently increased from some HUF37bn (€120.4m) to as much as HUF65.3bn (€212.5m), enabling the Hungarian group to seek acquisitions.

Bonafarm is controlled by local businessman Sándor Csányi who also serves as the chief executive of OTP Bank, the country’s largest commercial bank.

Market consolidation​

Acquiring a stake in MCS Vágóhíd will complement Bonafarm’s activities in the Hungarian meat processing industry. The group owns local pork meat processor Pick Szeged Zrt, which runs four processing plants in Szeged, Pecs, Baja and Alsómocsolád, all located in Hungary’s eastern region. Pick Szeged claims to have a domestic market share of 30%, and some of its meat brands include Pick, Délhús, Herz and Ringa.

In addition to the domestic market, Pick Szeged generates around 40% of its sales from exports to some 35 foreign markets. Some of the company’s main export destinations include the US, Canada, Brazil, South Korea, EU member states, and Japan, where the meat processor said it has a trading office. In 2015, Pick Szeged reported sales of about HUF74bn (€240.8m), up 10% compared with a year earlier.

Poultry meat is currently the most popular type of meat in Hungary, with an annual consumption of some 32kg per capita, followed by pork meat, with an average per capita consumption of about 28kg per year, according to data released by local industry association, the Poultry Products Council (BTT). This said, over the past few years, the Hungarian government has intensified efforts to promote pork meat consumption through the launch of dedicated programmes to promote the meat domestically, and support investments by local pork meat processors. Last year, the cabinet also lowered the value-added tax (VAT) on pork meat from 27% to 5% to foster higher consumption.