General meeting of CG Nordfleisch AG

A positive operating result is expected for the current financial year

On July 01, 2004, the ordinary general meeting of CG Nordfleisch Aktiengesellschaft for the 2003 financial year took place in Hamburg-Altona, chaired by the chairman of the supervisory board, President Werner Hilse.

In the German food retail trade - the most important customer group of the Nordfleisch Group - the trend towards discounters continued unchanged. Against this background, the price pressure from customers continued to increase and sales of self-service meat and self-service packaged sausages increased again.

Meat consumption increased slightly compared to the previous year. Pork has primarily contributed to this with an increase of 0,6 kg per capita to 39,3 kg. Beef consumption, on the other hand, remained at the 8,4 level at 2002 kg per capita in the year under review.

In the EU, production at 201,2 million pigs for slaughter was 0,1% above the previous year's value. In Germany, gross domestic production amounted to 41,2 million units and was thus 1,1% above the previous year's value. Average annual producer prices for slaughter pigs in Germany were EUR 1,22 per kg slaughter weight, 6,2% below the previous year's prices.

In the EU, 26,9 million head of cattle were produced, 2,2% fewer than in the previous year. For the first time in 25 years, EU beef production fell short of consumption in the year under review. In Germany, the gross domestic production of cattle and calves fell significantly in the first half of 2003 compared to the corresponding period of the previous year. In the second half of the year, the situation eased a little, so that it fell by a total of 6,3% to 4,15 million units compared to the previous year. In 2003, producer prices for young bulls were slightly down on the previous year at EUR 2,41 per kg slaughter weight.

The CEO of CG Nordfleisch AG, Erich Gölz, pointed out in his report that the earnings situation in the meat industry was difficult again in the 2003 financial year. It was characterized by the persistently unfavorable economic situation, difficult market conditions in the fresh meat sector - especially pork - due to e.g. T. dramatic price differences in the pig purchase prices between the European competitor countries to the detriment of Germany as well as the significant appreciation of the EURO and the associated difficult export opportunities. Compared to the previous year, the slaughter output of the Nordfleisch Group declined slightly.

At 5,2 million pigs, the company's own slaughtering of pigs was at the same level as the previous year, and at just under 275.000 head, the company's own slaughtering of cattle was 5% lower than in the previous year. Overall, the company slaughtered 6,3 million slaughter units by 1% below the previous year's slaughter. In the industry, pig slaughter increased by 2,6% while beef slaughter fell by 7,5%.

Due to the lower annual average price level for slaughter pigs, the Group's sales performance was EUR 1.554 million, or 71%, below the previous year at EUR 4,4 million.

The result from ordinary activities deteriorated significantly by almost EUR 7,1 million from EUR 20 million to EUR -12,1 million. The positive extraordinary result of EUR 9,2 million includes debt waivers by banks amounting to EUR 30,0 million as well as additions to structural provisions of EUR 12,7 million and unscheduled depreciation of property, plant and equipment amounting to EUR 8,1 million . Taking taxes into account, the net loss for the year was EUR 5,2 million (previous year: EUR +2,2 million).

The group of companies employed 2.892 people on average over the year, 86 fewer than in the previous year. The closure of the plants in Kassel and Gießen as well as rationalization measures at the locations contributed to this reduction in personnel. In 2003, too, the employees were motivated and committed to the company's goals.

Negotiations with the Dutch company Bestmeat BV, which began in the 2003 financial year, resulted in the conclusion of a contract that was finally completed on March 31, 2004 after approval by the European antitrust authorities with the majority takeover of the shares in CG Nordfleisch AG. The Bestmeat Group, which also owns the Dutch meat group Dumeco BV and the German meat group A. Moksel AG, holds 88% of the shares in the company.

The integration of the Nordfleisch Group into the Bestmeat Group has led to a substantial improvement in the financial situation and the equity base of CG Nordfleisch AG. After the majority transfer of the shares in the company, the previous pool of banks waived claims against the Nordfleisch group amounting to EUR 30 million. The Bestmeat Group has acquired restructured debtor warrants from past debt waivers in the amount of EUR 112,8 million and receivables from the bank pool in the amount of EUR 43,75 million and made them available to the Nordfleisch Group as a long-term shareholder loan. In addition, the Bestmeat Group has sustainably strengthened the capital resources and liquidity of the Nordfleisch Group in the amount of EUR 15 million by means of an injection of equity. Additional liquidity is made available through the sale of shares in NFZ Pronat GmbH, a subsidiary of CG Nordfleisch AG, to a group company of BEST Agrifund NV.

One focus of activities in the current financial year will be the organization of efficient cooperation with the Dumeco Group and the Moksel Group within the Bestmeat Group. The aim of the strategy of BEST Agrifund NV, which operates on the basis of a very strong financial position with equity of EUR 561 million and an equity ratio of 36%, is to take a leading market position. The Bestmeat Group aims to increase efficiency along the entire value chain in the coming years, with particular emphasis on food safety, compliance with animal welfare conditions, sustainability of animal production, quality assurance in general and working in partnership with farmers and customers.

As part of the integration into the Bestmeat Group, a large number of cost-cutting and earnings improvement measures have been introduced, some of which will contribute to a significant improvement in earnings in 2004, but mainly in 2005. As a result of these measures, a positive operating result is expected for the current fiscal year.

Source: Hamburg [ nordfleisch ]