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Send  Share  RSS  Twitter  27 Feb 2009

FOOD & BEVERAGES: Will Lusitania Close?

 



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KING Consolidated Foods looks set to take tough action at its perennially unprofitable seafood distribution Lusitania Food Products, with suggestions that the processing division could be closed.

Cape Town-based Lusitania - which processes, stores, wholesales and distributes frozen chilled and dry products – was acquired by Kingco (then controlled by food entrepreneur Dennis Finch) in the late nineties in what many regard as the one of most undiscerning acquisitions of that decade.

Lusitania has for the most part cost Kingco money, and detracted from its profitable food franchising operations like the Keg and McGintys.

Kingco’s controlling shareholder Tony Cotterell (the East London based transport magnate) has so far resisted the temptation to take radical action at Lusitania. But recent indications are that Kingco has now had its fill…

In the half year to end August 2008 Lusitania was again fingered as the main culprit in Kingco’s R2.5 million loss from turnover of R120 million.

This is most disappointing after Kingco reported in September last year that Lusitania had demonstrated a marked recovery of market share in the first quarter of the financial year.

Cotterell says Lusitania’s processing division continues to be the main contributor to Kingco’s losses. He says the group is in the process of rationalising these operations and is “considering the closure of this division.”

Things don’t appear to be that great at the rest of Lusitania with Cotterell reporting that the distribution division experienced continued transport cost pressures.

Hopefully Lusitania’s distribution division can show some improvement in second half trading with the fuel price subsiding markedly in recent weeks.

Cotterell, though, is clearly not giving up hope. Kingco’s interim report states that the ever patient Cotterell committed additional funds to the group to assist with its operations and expansion activities.

Lusitania does tend to put in a stronger performance in second half trading and a ‘lighter’ food business may well have a realistic chance of achieving those elusive profits.


 
 
 
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