CampoMos 'is not in trouble'

- Last updated on GMT

The future of Spanish meat processor Campofrio Alimentacion's
operations in central and eastern Europe has been thrown into doubt
following reports that its Russian business interest, CampoMos, is
about to be restructured in preparation for a sale - allegations
the company has firmly denied.

The news comes just weeks after the company announced that it was preparing to sell its indebeted Polish division - Morliny to US meat giant Smithfield Foods for $50 million.

Campofrio currently has operations in Spain, France, Portugal and the US. In eastern Europe the company has business concerns in Romania, in addition to its interests in Poland and Russia.

A report by Russian news agency TASS said that the CampoMos business, which entails two plants in the Moscow area, would undergo a variety of cost savings initiatives, including the restructuring of the management team, the sales offices and an increase in advertising expenditure. The report also said that the plan aimed at turning around the company's shrinking sales in that market.

The report was firmly denied by a spokesperson for Campofrio, who told that the company was satisfied with its performance in Russia. The spokesperson added that the source of the rumour was a report by a Spanish journalist which had been published in the Spanish press. He said that the journalist had not been able to provide clear evidence of the sources for the report when questioned about it.

However, looking at CampoMos results in recent years might suggest that a restructuring strategy would not be a bad idea. According to the Financial Times, in the first half of 2004 the company's revenue of €48 million was 5 per cent down on the same period in 2003 and 25 per cent down on the corresponding period in 2002.

Currently CampoMos is estimated to have an 8 per cent share of the market for processed meats in Russia. Compofiro has a 40.45 per cent controlling stake in the company, whilst Smithfield Foods has a 22.4 per cent share. The two companies have been working together closely in recent years, owing largely to Smithfield's interest in the Spanish company. Indeed only two weeks ago Smithfield announced that it was upping its share in the Campofrio business from 15.2 per cent to 22.4 per cent at a cost of $49 million.

If CampoMos is in trouble, then it might be a logical step for Campofrio​ to call on the substantial financial resources of its US partner Smithfield. However, with $49 million in the bank from the sale of the shares and a further $50 million of Smithfield's money about to be banked for the sale of Morliny, Campofrio could well be in a position to look after itself.

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