Guadalajara, Spain. 9 June 2024.
Hevo Group, the holding company created following the integration of the activities of egg producers Dagu, Ous Roig and Granja Agas, completes its first year of joint operations, consolidating its position as third largest player in the laying poultry market, with a view to further strengthening this position through new investments, as will be analysed in the next issue of the journal Alimarket. To this end, it has budgeted an outlay of €10M during the 2024 financial year, double the amount invested in the previous year, directed towards the conversion to cage-free production systems, productivity improvements and other R&D&I activities. At the same time, within the context of consolidation that the sector has been experiencing in recent years, the group states that it remains “attentive to acquisition opportunities offered by the market“, with the support of its main shareholder (90%), the investment vehicle Master Gallus, whose investors are primarily family offices, both Spanish and from elsewhere in Europe, advised by Cleon Capital.
This year, Hevo Group’s commitment to a cage-free model will materialise in the conversion of four additional laying houses from cage to floor-rearing production, code 2, a project that will absorb an investment of €5.7M. In this way, 58% of its hens will be housed in cage-free systems, compared to 50% in 2023, with a total laying flock of 4 million birds. Meanwhile, its marketed volume of cage-free eggs will approach 30 million dozens by the close of the same period, up 12.8% on the previous financial year (26.5 million dozens), enabling it to continue meeting the growing demand for alternative eggs from modern retail, its primary customer, particularly under private label (own-brand).
“Alternative eggs are achieving increasing penetration in Spanish households, as major retailers remove code 3 from their shelves and replace it with barn eggs. Inflation primarily affected organic eggs and, to a lesser extent, free-range eggs, although volumes are gradually recovering”, the group states. In total, Hevo Group’s egg supply business to self-service retail will account for 73% of total volume in 2024 —52% in 2023 and 79% for cage-free production—, having “gained market share within its traditional customer base”. The holding company works with virtually all major retailers in the country, including Mercadona, El Corte Inglés, Carrefour, Makro, Covirán, Coaliment, Eroski, Consum, Bon Preu, Dia and Condis.
Greater automation and sales
In parallel, Hevo Group will this year undertake the modernisation of its grading and packing centre in Guadalajara, an initiative to which it will allocate €1M. Among other actions, it plans to carry out refrigeration of the facility, the acquisition of new machinery for washing plastic trays, and the automation and robotisation of production lines. Its assets are further complemented by two additional grading centres, an egg products processing plant, three feed mills and an in-house laboratory, as well as around twenty farms in Guadalajara, Cuenca and Tarragona —15 laying farms and five rearing farms—, integrating the entire egg value chain. “We also wish to implement a new ERP system, which will streamline the order receipt, production and order fulfilment process”, Hevo announces.
In economic terms, the group closed 2023 with a combined turnover of €155M, up 21% compared to the €128M recorded in 2022, and 10.7% above the target announced exactly one year ago, with a net profit of €7M. “In 2023, the sharp rise in feed costs during the first quarter, combined with significant increases in other inputs, necessitated the passing on of part of these increases, which, together with the rise in prices, facilitated the recovery of margins”, Hevo Group explains. Looking ahead to this year, a period pointing to a downward trend in free-market egg retail prices, its forecasts envisage sales of €148M through the marketing of 80 million dozens of eggs (4 million more than in 2023), alongside a further “adjustment of margins in an environment where costs are continuously increasing”.
Source: CLEON CAPITAL , 20 May 2024
Full Reproduction from Alimarket