Singapore owners ready to sell pig production kingpin Rivalea

QAF's Rivalea piggeries, meatworks and stockfeed business for sale

Agribusiness
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The nation's biggest piggery and pig meat processing business has been put up for sale by Singaporean food group, QAF

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The hunt is officially on to find a buyer for southern Australia's massive pig and stockfeed business Rivalea.

The nation's biggest piggery operator and pig meat processor has been owned by listed Singaporean food group QAF for almost 20 years, but the parent company wants to focus its efforts on its bakery and food distribution ventures in Asia.

Rivalea Australia accounted for about 15 per cent of the national pig herd last year, breeding about 1 million piglets

It also processed about 26pc of Australia's pig meat, or 1.4m pigs, at its Corowa and Melbourne plants.

Its three southern NSW mills produce about 350,000 tonnes of stockfeed annually for the poultry, pig, dairy, beef and sheep industries under brands such as Optimilk, Eggstra, Grolean and Nutrimax.

However, after recently expanding its piggery sites in southern NSW and central Victoria, spending $8m upgrading its Melbourne processing site's capacity, and installing three on-farm effluent-powered electricity generators, QAF said Rivalea was now of sufficient scale to be "an ideal platform for a new owner with a strong focus on the animal protein segment to take the business to the next level".

Price hopes

QAF has previously considered selling or publicly listing its Australian primary production division, reportedly looking at a $196m price tag back in 2017-18.

Riverlea's farming activities were originally established by the big US agribusiness group Bunge in 1971 around Corowa on the NSW-Victorian border.

Acquired by QAF in 2001, then renamed Rivalea Australia in 2009, the business now employs about 1200 staff and has about 7600 hectares of farmland including a network of 25 properties in the Murray Valley and near Bendigo and in the Victorian Wimmera, carrying about 40,000 breeding sows.

Contract producers own 18 of the Riverlea supply farms.

The business' meat and offal products for the domestic and export markets include lines sold under the High Country, Murray Valley, Family Chef and St Bernards brands, and Riverview Farms roasted pork, available ready-cooked in Australian supermarkets.

Last month QAF's half-year results tipped Rivalea was on track to achieve a solid jump in net annual revenue to $404m - up from about $384 in 2019 and $353m in 2018.

Earnings before interest, tax, depreciation and amortisation were forecast to climb from $21m last year to $38m.

However, the company said while its cash position was strong the impact of the coronavirus pandemic was evolving and difficult to tip.

Rivalea's 80pc-owned Melbourne abattoir and further processing subsidiary, Diamond Valley Pork, which employs more than 300 staff, was forced to temporarily shut last month and after 23 employees recorded positive COVID-19 test results.

Production capacity has reduced at Laverton by a third during August and September as part of Victoria's response to controlling the pandemic.

Changing agenda

Although QAF has declined to talk publicly in Australia about its sale plans, its half yearly results announcement confirmed a recent strategic review of its total business direction had directed a focus towards its bakery, distribution and warehousing segments.

These activities would concentrate on its core markets of Singapore, Malaysia and the Philippines, and cater to a growing 650m population across the ASEAN region.

"The group intends to pursue a sale of the primary production business as this is in the animal protein segment which is very different from the bakery, food distribution and warehousing businesses and operates in a different geographical region," said QAF company secretary Serene Yeo.

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The company has directed potential investor inquiries to the Singaporean office of its financial advisor, the big food and agribusiness banker, Rabobank.

Speculation about potential buyers has ranged from private equity investors to Brazilian multinational meat processor JBS and possibly the Queensland and South Australian farmer-owned SunPork Fresh Foods.

Rivalea's revenue for the first half of 2020 was described by QAF as flat, but EBITDA was more than double the same period last year at $15.4m.

Despite lower sales volumes because of coronavirus' impact on food service demand, the business benefited from 12pc higher average pork selling prices, thanks to tighter pig supplies.

A better performance from its processing business helped earnings results, too, as did slightly lower grain prices this year in the wake of last year's severe drought conditions which sent costs soaring 60pc on 2018 values.

Commissioning the company's third biogas power plant on its main Corowa district piggery at the end of last year proved a significant cost saver for the entire QAF group, with fourth quarter power costs down 10pc to $6.2m.

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The story Singapore owners ready to sell pig production kingpin Rivalea first appeared on Farm Online.

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