Purefoods-Hormel to put up P1.2-B meat processing plant

Purefoods-Hormel Co., a joint venture company created by the two meat industry giants, is investing P1.2 billion in a new most processing plant that will be put up in Alaminos, Laguna.

This developed as mother company Purefoods Corp. said it expects a more than 50-percent increase in its net income for the third quarter this year owing to better poultry prices and an uptick in the demand for processed meat. Although profits were better than expected during the first quarter, they were still lower than last year due mainly to very low poultry prices.

The meat processing plant will be dedicated mainly to the production of hotdogs, as demand for the commodity has been increasingly by 30 to 35 percent a year starting last year. In terms of tonnage, production volumes for Purefoods-Hormel went up by 30 percent this year.

The new plant is expected to be operational by late next year.

Ma. Rosa L. Santos, Purefoods senior vice president and chief financial officer, told The STAR that the processing plant in Marikina is reaching ‘bumpin capacity.’

Purefoods currently has a 50-percent share of the hotdogs market. The rest of the market is shared by Swift, San Miguel, and several other meat processing companies.

The joint venture between US-based Hormel and Purefoods was established primarily to capitalize on Hormel’s world-recognized brand as well as its technical expertise. Purefoods has a 60-percent equity in the company, with the rest held by Hormel.

Purefoods-Hormel mainly takes care of the processed meat and refrigerated meat business. Purefoods Corp., the food company of the Ayala Corp., currently handles the poultry and flour milling divisions.

There had been talks between Hormel and Purefoods over the possibility of the latter buying into the mother firm, but according to Santos, the talks might probably take a long time.

"Ayala has been approached in the past by Hormel in the case of Purefoods and by Tyson for the poultry division. Money is not an issue here. If Ayala feels that it can get a good value for its company and give its shareholders a better value, then it can open up the company to foreign investors. Now is a good time since the company is making money. But we’re not actively looking for buyers," Santos said.

Another joint venture company, Pillsbury-Purefoods Co., was set up February this year to handle dough-based and flour-based products. This company, according to Santos, is currently looking at producing frozen dough for the food service industry. Pillsbury of the US is the world’s leading manufacturer of frozen dough.

Purefoods also has a 50-percent equity in a company which it established in partnership with Indonesian-based Sinar Mas for the production of canned tuna in North Sulawesi.

Purefoods used to have a tuna processing plant in South Cotabato but later sold it due to declining fish catch in the area. Santos added that labor cost in the area was becoming too expensive.

The Purefoods-Sinar Mas company exports canned tuna to the US and Europe and has been profitable for the last 2 1/2 years, Santos said.