Boparan - UK Poultry Production

All,

Positive read-across for Boparan:

Poultry production in the UK for the month of March has been stable YoY (see chart below) at 144kt, suggesting 1) the largest producer did not develop a supply problem and 2) that despite the likely different make up of HORECA food turnover, the total consumption of Chicken has also not changed as a result of the shift to supermarkets.

However, because of said shift to supermarkets, some producers - with the right packaging facilities and meal prep. plants have seen a strong increased demand for such products, which includes Boparan. 

What is likely happening therefore, is that Boparan and other traditionally supermarket oriented suppliers will be buying the slaughtered poultry from suppliers with traditionally a HORECA orientation to finish these fit for supermarket purposes. 

So we are expecting a slimmer %age GM for Boparan during the Covid-19 period, but stronger top-line and thus a higher total EBITDA (albeit at a lower margin). And we are expecting plenty of Opex being branded as “One-Off”.

Overall, while the constant poultry output is within expectations it is good confirmation and ultimately positive for Boparan.

Wolfgang