Despite what it termed a “challenging economic climate” within the beef industry, Northern Ireland-based meat processor, Linden Foods, reported steady profits last year. Accounts recently filed with the companies office show Linden Foods recorded pre-tax profits of £1.65m (€1.85m) for its 2019 financial year in the 12 months to the end of September 2019, which was up 10% year on year.

The company made operating profits of just under £2.1m (€2.3m) last year, which was up 1% year on year. Operating profit margins were relatively steady in 2019 at 1%, which highlights the low level of profitability in the sector. Linden attributed its low profit margins to strong cattle prices during 2019.

Overall, Linden’s total sales for the year were down 3% to just under £201m (€224m).

The company said it maintained “steady growth” in some of its key export markets in 2019 and that there was strong demand during the year for supermarket specified livestock.

The accounts show Linden spent almost £2.4m (€2.6m) on R&D projects last year. The company employs over 1,000 people and has net assets of just over £20m (€22m).

Linden Foods operates one of Northern Ireland’s largest beef processing factories with a capacity to slaughter up to 100,000 head of cattle per annum. Its lamb processing plant is one of the top three lamb processing sites in Northern Ireland with a capacity to process 200,000 head of sheep per annum.

Linden Foods is a joint venture business split 50:50 between Northern Ireland farmer co-op Fane Valley and Larry Goodman’s ABP Food Group. The company did not pay a dividend to its owners last year.

Linden has invested heavily in upgrading the slaughter and deboning facilities at its site in Dungannon and created a retail packing and new product development centre on a separate though nearby site in 2011.

The retail packing site is also supplied by a processing factory Linden acquired in the north of England. The possibility of Brexit disrupting this east-west trade flow from England to Northern Ireland would be seen as a risk to the business. It is a long-established meat supplier to Marks & Spencer and also has listings with Tesco, Morrison’s, Lidl, Aldi, Dunnes Stores and SuperValu. The company has a range of blue-chip foodservice customers such as McDonald’s.

The joint venture with ABP has given Linden access to ABP’s portfolio of global customers, some of which wouldn’t trade with a standalone company that it didn’t consider to have a large enough supply base.

However, there remains operational independence and brand identity from ABP with, for example, Irish Country Meats continuing to regularly buy lambs in the North in competition with both Linden and ABP Lurgan.

Comment

Across its five abattoir locations, the Irish Farmers Journal estimates Foyle Food Group (FFG) handles about 325,000 cattle annually. It is a fully integrated company with its own rendering facilities to handle byproduct and has considerable further processing capability as well. Much of this takes place in Northern Ireland and has to be transported onwards to markets in Britain, the EU and beyond. Its accounts to the end of 2019 reveal an operating profit of 1.9% – £6.9m (€7.8m). This is a huge amount of money but when it is applied across 325,000 cattle, it equates to £21.23 (€24) per head.

Linden processes cattle and sheep and has a factory in England so it is difficult to estimate profit per head. However, its operating profit at 1% is lower than FFG.

For companies to trade securely and be in a position to invest in the business, profit is necessary and based on the published information, these aren’t excessive.