Thursday 29 September 2016

Feathers flying after the UK's Brexit vote - but Moy Park's boss still rules the roost

Janet McCollum is the first woman to head up the North's biggest firm. She tells Simon Rowe how she will steer the poultry giant through post-Brexit squalls

Simon Rowe

Published 03/07/2016 | 02:30

Janet McCollum by Jon Berkeley
Janet McCollum by Jon Berkeley

Inside an unflashy headquarters in rural Craigavon, Co Armagh, Moy Park boss Janet McCollum oversees a £1.4bn (€1.7bn) food company that processes five million chickens per week - the equivalent of one million chickens per day - making it Ireland's largest poultry producer.

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As chief executive of Northern Ireland's largest company, employing 12,000 staff across 13 processing facilities in the Republic, Northern Ireland, the UK, France and the Netherlands, McCollum (51) is easily one of the most powerful businesswomen on the island of Ireland.

Her company is now owned by Brazilian food giant JBS after it was sold by Sao Paulo-based firm Marfrig in September last year in what was the largest-ever food firm deal in Northern Ireland. JBS acquired Moy Park for £988m (€1.32bn), making it the world's biggest beef producer and the second-largest global food business in the world.

In European terms, Moy Park is big, but its numbers are chicken feed when compared to 'super-sized' JBS. Its new owner produces 14 million chickens per day, compared to Moy Park's one million.

A decade ago, JBS was mainly focused on selling in its home territory of Brazil. It has since gone on a global buying spree that has seen it grow from a $1bn private company into the $41.9bn (€50.8bn) publicly quoted giant that slaughters 100,000 head of cattle a day, employs more than 200,000 workers and operates 300 processing facilities exporting to 150 countries across the five continents.

Moy Park has been on its own spectacular growth journey too. From humble beginnings 70 years ago as a small local farming business in the Co Tyrone townland of Moygashel, it is now on course to become one of the top five biggest poultry processors in western Europe.

When Marfrig acquired Moy Park in 2008 from the US group OSI, the Northern Ireland company's annual turnover was £700m. Today it is £1.4bn.

But Moy Park is much more than a poultry firm, insists Janet McCollum, a 22-year veteran of the firm.

"A lot of people think we are just a poultry company. But actually we are a food company."

Moy Park's product portfolio now includes ready-to-eat meals, pre-cooked meals, breaded and frozen foods, vegetarian foods, desserts, nuggets, goujons and chicken kievs.

"We produce beef products, vegetarian products, such as spring rolls, and onion rings. We also produce desserts such as apple pies and doughnuts. So you could say we are company that covers starters, main courses and desserts," said McCollum.

Just over 50pc of Moy Park's sales are in the prepared and breaded products sector, with 42pc of sales coming from its fresh poultry products. Its sales channels are heavily weighted towards major retail brands in the UK and continental Europe including Tesco, Waitrose, and Jamie Oliver, and major fast-food restaurant chains, such as McDonald's, KFC and Burger King.

More than 60pc of Moy Park's sales come from retail channels, with 27pc from food service channels.

McCollum is the driving force behind Moy Park's pursuit of the convenience product sector. She wants to increase sales of its convenience products, which represent just 7pc of total sales.

Moy Park's decision to sponsor a new series of Ant & Dec's Saturday Night Takeaway on UTV Ireland is aimed at capturing more of this convenience market with a 'TV dinner'-type pitch to the show's 190,000 viewers.

Football lovers will also recall that Moy Park was one of the main sponsors of the 2014 World Cup in Brazil and its brand was advertised on high-profile billboards during matches.

"We have transitioned from being a poultry processor to a food company, investing heavily in innovation and food development," said McCollum.

"Today, the trend in the market is very much about convenience. We have been on that journey. We've always complemented our fresh poultry offering with convenience foods, such as ready-to-eat meals and bread-coated products. What's different today is the investment in the past three to five years."

In a sign of its growing ambition in the convenience food sector, McCollum points to the firm's £170m (€205m) strategic investment programme, which has seen £20m invested in its Dungannon site, a £10m investment in its Ashbourne site, and a £4m investment in next generation 'Ready to Eat' facilities at Craigavon.

Since taking the helm in January 2014, it has been a rollercoaster ride for the married mother of three.

First, a planned IPO on the London Stock Exchange was shelved in 2015. Then Moy Park was subsequently sold by owner Marfrig to fellow Brazilian food giant JBS, who acquired the poultry giant as part of a strategy to secure a foothold in Europe. And now the UK-registered company is in the middle of a post-Brexit storm.

Recalling some of those events, McCollum appears to take it all in her stride. "You take it as it comes. Moy Park has been part of global businesses for many years now, so IPOs, mergers and acquisitions are all part of being a global business. You're heading in one direction, then strategically you change, you adapt really quickly."

But the Brexit vote casts huge uncertainty on JBS's European strategy. What might have started as a rollercoaster journey has suddenly become a white-knuckle ride. No doubt feathers have been flying in the company's boardrooms in Craigavon and Sao Paulo.

McCollum was one of many top business executives who added their vocal support to the Remain campaign just days before the referendum. She had warned that "any move away from the free market in which we currently operate could increase tariffs, add administrative burdens and limit export opportunities".

Now her company faces a period of major uncertainty. About 78pc of Moy Park's revenues come from Ireland and the UK, while 22pc come from continental Europe. That's a large chunk of sales that appear to be in jeopardy until the terms of a post-Brexit trade deal with the EU are hammered out.

Speaking after the Leave vote, McCollum was circumspect about the challenges ahead.

"Although there will be changes to the environment in which we operate, we are confident that we have a robust business that can continue to thrive and grow." But JBS had contingency plans in place in the event of a feared Brexit vote. It had been busy setting up Dublin-based shell companies as it prepared to relocate its global headquarters to Ireland. In May, it announced a major restructuring plan which will see it spin off its international business, and move its headquarters to the Republic ahead of a planned listing on the New York Stock Exchange.

JBS is restructuring its business into two separate entities: JBS Brazil and JBS Foods International. All of the group's Brazilian operations will be consolidated into JBS Brazil, while its international processing operations in Europe, the US and Australia will be merged into a new company called JBS Foods International and will be listed on the NYSE.

But rather than choosing the north of Ireland, where Moy Park's head office is located, it appears JBS bosses decided in December 2015 that the Republic of Ireland was the preferred location for its new international HQ. The Republic's more favourable corporation tax rate - until 2018, at least - and its ability to offer a financial shelter from the feared effects of a Brexit probably tipped the balance. Five shell companies linked to JBS were incorporated just before Christmas last year, less than three months after the Brazilian food giant acquired Moy Park. Another company JBS Foods International Designated Activity Co was registered in May. However, even more changes may be afoot at Moy Park.

With JBS having to finance a $11bn (€9.8bn) debt mountain after its acquisition frenzy in recent years, cost savings across the group are a priority.

JBS has revealed that it is expecting deal benefits of $50m (€45m) from the Moy Park acquisition in the current calendar year. It is targeting these savings by exploiting the meat giant's muscle in purchasing, especially in packaging, logistics and feed.

JBS has also flagged "synergies associated with the acquisition of feed ingredients, particularly grain", required to feed Moy Park poultry.

JBS is one of the world's largest purchasers of corn and soybean meal for the production of meat products. Poultry feed represents about 60pc of Moy Park's input costs.

JBS chiefs have signalled they are targeting a lift in Moy Park's margins from 7.5pc to some 10pc.

A JBS procurement team has visited Moy Park in recent weeks to identify where cost-savings and synergies can be made. This is likely to lead to a review and renegotiation of some contracts with suppliers, an audit of transportation and energy costs and raising performance and optimisation levels at production units.

When asked about where exactly those $50m cost-savings will be made, McCollum was vague: "We are seeing many benefits around JBS' global reach and their knowledge. We have been sharing best practice.

"Whether it is feed procurement or right across the supply chain, we are sharing best practice with them."

McCollum's pay package is probably deemed off-limits when it comes to cost-savings, however. While Moy Park's annual accounts are less than candid on what its chief executive earns, it's likely she is the company's 'highest paid director', taking home a pay package worth €645,000, an increase from €562,000 in 2014.

McCollum was equally tight-lipped on the question of whether she had run a slide rule over Ulster meat firm Dunbia.

Rumours have circulated in recent months that the Dungannon-based meat processor, with an annual turnover of £800m-plus, could be sold to JBS after it was revealed that it was looking for new buyers.

"JBS said when they entered Europe that their priority would be to grow in poultry and pork," said McCollum, pointing to the fact that Dunbia is in a different space in the market. "But we'll always look at any opportunity. You are always keeping your eyes open for any opportunity that might come along."

Crowned 'Outstanding Business Woman of the Year' in 2014 at the Women in Business Northern Ireland awards, McCollum is proud to champion the role of women in industry.

She said: "It's important that women have the confidence to take on roles." Rather than seeing herself as a role model or a leader in this area, however, McCollum said: "It's about networking and inspiring women to have the confidence to take on roles within business."

McCollum has already made history by being the first woman to head Northern Ireland's biggest firm. Given her track record, it looks very likely that the Moy Park boss will rule the roost for some time to come.

'Self-belief and positivity: Be true to yourself'

What is the best piece of business advice you ever received?

“Be true to yourself, have self-belief, stay positive´.”

 

What is your biggest extravagance?

“Our holiday home in Portballintrae — it’s a privilege to spend time with friends and family in this very special place, where I spent many childhood summers. We go up many weekends. That for me is what I really enjoy.”

 

When were you at your most skint and why?

“In the early stages of my career, just married with a young family and studying for my CIMA exams — a hectic time, but all worth it.”

 

What is your proudest achievement?

“My three children — watching them grow into young adults and achieving their goals and ambitions makes me extremely proud.”

 

Sporty or not?

“I spent 10 years at Victoria College in Belfast. Hockey was my passion. I used to look out the classroom window every day and see if it was raining to see whether we would have our hockey practice or not.”

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