9 March 2001

Danes acquire global strength

Buying Howard Group last autumn propelled Danish

company Kongskilde Industries closer towards the top

league among European farm machinery manufacturers.

Peter Hill profiles the growing enterprise

ASK Per Michelsen, managing director of Kongskilde Industries A/S, about the purpose of buying Howard Group (FW 15 Dec) plus four other farm equipment manufacturers in recent years and his answer is straightforward enough.

"To create a modern and global industrial group and grow out of the description of being a traditional and boring agricultural machinery company," he says.

Mr Michelsen, it seems, is well placed to realise that goal during a time of change and consolidation in the farm equipment industry. Apart from 1999, when a market downturn and big investment spend swept Kongskildes financial results into a loss, the company has enjoyed profitability in recent years.

As some manufacturers find it increasingly difficult to sustain profits in a world market with reducing unit sales but a need for greater effort and investment in R&D, companies like Kongskilde are able and willing to pick up the pieces.

Since 1997, the company has bought six manufacturers whose Scandinavian parent groups have tired of the industrys ups and downs. All have extended Kongs-kildes arable product line to allow it to offer a wider range of equipment and increase the companys sales reach through its own subsidiaries.

In Britain, a fair proportion of dealers sell Kongskilde/Overums and Howard/Nordsten products, says the companys UK resident manager Charlie Halliday.

"We will continue to support Howard/Nordsten dealers, whether or not they also sell Kongskilde products," he says. "But, of course, the situation does open new doors for us in some areas of the country."

Several Howard/Nordsten specialists from Tri-Ag – the now dissolved company that was jointly owned by Howard and Lemken – have taken up new posts at Kongskildes UK base at Holt, Norfolk. This will maintain product expertise, says Mr Halliday.

With the extensive parts stock held at Tri-Ags Wymondham base having been moved, the integration of the largely complementary product lines is pretty much complete.

Mr Halliday reckons they will increase Kongskildes UK sales turnover by some 25%, the most welcome additions to the product portfolio being rotary cultivators and power harrows.

"Weve not had them in our range before. They fit very well with what were best known for – seed-bed cultivators like the Germinator and Overum ploughs."

Other Howard products and the Nordsten seed drills are also largely complementary to existing Kongs-kilde equipment, which includes the companys own Demeter range of drills and (ex-Tive) pneumatic fertiliser broadcasters.

Not that agricultural equipment is Kongskildes only interest. The Howard acquisition has increased the importance of the groups soil preparation division, taking it to around 78% of forecast group sales turnover. Industrial pneumatic conveying systems (13%), grain handling and drying (7%) and portable space heaters (2%) will also contribute to sales likely to grow by almost 50%, thanks to Howards contribution, to more than DKK 900m (£74.6m) this year.

This will put Kongskilde ahead of most European farm machinery companies, with the exception of giants Kverneland and Kuhn. They are twice as big, in terms of sales, as their nearest competitors but, unlike Kongskilde, sell grassland as well as arable equipment.

Further strengthening Kongs-kildes position in agriculture is a new root crops division which is set to develop into sugar beet and potato harvesting. This follows Kongskildes involvement in a three-way consortium to rescue fellow Danish firm TIM. The firms self-propelled beet harvester activities have been merged with another consortium member, Thyregod, but Kongskilde will handle sales in several markets, including the UK, complementing the Kongskilde Juko trailed machines.

Building the agricultural portfolio like this goes against Kongskildes long-term plan of 1999 which would see non-agricultural interests growing to represent 50% of sales turnover. But it also demonstrates the companys willingness to seize opportunities to develop its agricultural product range and distribution network.

The latest came about when shareholders in Thrige-Titan, Howard Groups parent, decided that two years of losses signalled a need to make its agricultural division part of a bigger operation.

Re-named Howard Group from T-T Agro barely two years ago, the division was formed by the acquisition in 1985 of the name and non-UK manufacturing plants of Howard Rotavator Company. These were then merged with Danish seed drill maker Nordsten.

Two years ago, Brockmuller, a small German manufacturer of tine cultivators, was bought to bolster the Howard tillage line, while the tractor loader business was sold to Quicke manufacturer Alo Maskiner of Sweden.

In addition to Howards manufacturing activities – though not necessarily the manufacturing plants – in Denmark, Germany and Spain, Kongskilde gets Howard sales companies in Denmark, Germany, France, Spain and the US. There will be rationalisation, with Nordsten drill production, for example, being transferred to Kongskilde Polska when a new factory is completed in two years time. &#42

Kongskilde acquisitions


Year Company Country Specialty New name

1997 DanagriPol Poland Seed drills & other implements Kongskilde Polska

1997 Karl Becker Germany Precision seed drillsand cultivators Kongskilde Becker

1997 Juko Finland Conventional & min-till seed drills, trailed sugar beet & potato harvesters Kongskilde Juko

1998 Overums Bruk Sweden Ploughs, Tive Kongskildepneumatic seed drills and fertiliser spreaders –

2000 TIM* Denmark Self-propelled sugar beet harvesters –

2000 Howard Group UK Tine and power cultivatorsand Nordsten seed drills –

* Part shareholding

Howard Rotavator rotary tiller and Howard power harrow are most significant additions to Kongskildes product portfolio. Per Michelsen (inset) says "We are creating a modern, global industrial group."