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More Acquisitions Likely, says William Sinclair, as Company Profits Soar
- 17 January 2012
William Sinclair chief executive Bernard Burns revealed that the growing media firm could look to acquire other horticultural brands and businesses in the next financial year, following the release of its full year results.
Talking to DIY Week yesterday, Mr Burns explained that, after a successful year, where pre-tax profit jumped 54%, William Sinclair will be looking at making further acquisitions in the growing media category in 2012. He suggested that the company could be looking at firms within the peat alternative category in particular.
The horticulture products supplier has made a number of successful acquisitions recently, including compost manufacturer Yorkshire Horticultural Supplies in November and Monro's gardencare brand Growing Success, as well as a specialist aggregates business.
William Sinclair has since closed Growing Success' manufacturing plant in Barnsley and consolidated operations in its Lincoln plant. So far integrating the new acquisitions into the existing business has cost William Sinclair money, however, Mr Burns expects to see contributions towards the bottom line in the next financial year.
Mr Burns told DIY Week that William Sinclair is keen on acquiring bolt-on companies that are in the same market and that can be integrated into the business and its sales regime. He explained that smaller firms are also able to benefit from William Sinclair's distribution coverage. "A lot of it is about critical mass", he said. "Once you are big enough to be able to send a lorry to a garden once a week, adding an extra box of rose food or slug killer isn't a big deal - the distribution costs for us are marginal."
Mr Burns added that William Sinclair is in a position where it can acquire companies in the growing media and gardencare market, "consolidate them and make them more profitable".
The chief executive's comments follow the release of William Sinclair's full year results for the 12 months ended September 30, 2011, which revealed a pre-tax profit increase of 54% to £3.18m. Operating profit was also up 13.6% for the year, while sales across the company jumped 12%, boosted by a strong performance by its Silvaperl business and specialist soils subsidiary Freeland Horticulture.
The results are even more impressive considering 2011 was a poor peat harvest year. Mr Burns explained: "Our core business was actually worse than last year because it was such a poor harvest. Previously our results would have shown this but we've changed the business enough in the past few years to withstand it." The company's newly-developed peat drying technology also meant that peat harvesting could continue despite a poor harvest during the summer months.
Mr Burns added that he is very positive about the year ahead, stating: "What underlies these results is that horticulture is a good place to be. The recession improves business because gardening is an inexpensive hobby and it's virtuous because you can grow your own food. Our business is helped by recession. It is also boosted by the demographic. The population is growing by around 1% ever year and it is getting older. Gardening is an older person hobby. As long as we get anything like reasonable weather, it's a good place to be."
Source: DIY Week - More Acquisitions Likely, says William Sinclair, as Company Profits Soar
