Sinclair sows seeds of a green revolution

By Lucy Killgren
Published: July 11 2008 18:32

Bernard Burns, the chief executive of William Sinclair, might, on the one hand, be accused of a lack of imagination.
His father was called Bernard, like his grandfather. He has a sprinkling of cousin Bernards and even a couple of cousin Bernardettes. When his son was born, he lobbied hard (without success) to name him Bernard, too, before his wife put her foot down.
“I don’t know if it’s so much a lack of imagination. More like sheer cussedness, I suppose,” Mr Burns says. “Bernard is not an easy name to grow up with and I think having a name like that builds character. It’s a bit of a badge of perversity, if you like, like driving a Skoda.”
The Skoda-driving Mr Burns has put cussedness to good use at some of the companies where he has worked. He has completed successful stints at Silentnight, the bed group, and Churchill China, the tableware company, where he was featured with the late Sir John Harvey-Jones for the series Troubleshooter.
“I like working in a turnround situation,” he says. “And I do think there is some value in going from one company to another, and one industry to another, in that you get a fresh pair of eyes on the business. The fundamental elements are the same: you make something for less than you sell it [for].”
Since he arrived at William Sinclair, the garden products group, he has focused on cutting costs and culling less profitable brands, with the result that profits have risen steadily. Arbuthnot Securities, the group’s broker, is predicting adjusted profits of £1.6m for the 15 months to September 2008, rising to £2.1m in the following 12 months.
But his time at Aim-listed Sinclair, where he has been chief executive since February 2005, has not been without its challenges.
A few months before he joined, the shares were hit after it announced accounting irregularities. More recently, soaring fuel costs have taken their toll and continue to be a thorn in the side of the business, which relies on transporting heavy and bulky produce around the country.
Meanwhile, the sector has incurred the wrath of environmentalists and green gardeners. They take issue with companies harvesting peat from the bogs that are home to rare and specialised organisms. They are also concerned about carbon emissions resulting from the extraction of peat for horticultural use.
“I agree with them to an extent,” he says. “But I believe we can do a cracking job for shareholders and also do what the environmentalists want us to do. There is a real commercial benefit in a product which has a lower peat content.”
He believes the large multiples and environmentally-aware garden chains such as Wyevale (which has adopted targets for phasing out peat-based growing media), will want to be seen to adopt best practice environmentally.
Mr Burns believes it is possible to move to a 90 per cent peat-free ratio for its products in five years, up from the current 60 per cent.
“The rest of the market will have to follow. The reason I want to be a leader in this market is to disadvantage competitors.”
Currently Sinclair manufactures a peat-free compost called New Horizon, and is focusing attention on alternatives such as bark, coir (a coarse fibre from coconuts) and green waste as peat substitutes.
Last year it increased its stake in Freeland, a green waste recycling business, to 87.5 per cent and this now accounts for about 10 per cent of Sinclair’s turnover.
Countering the hefty transport costs is one of his biggest challenges, although he argues these costs are higher for rivals that transport peat from Ireland and the Baltic region.
“We have a strong advantage in that production is all located on mainland UK. This point of difference will become increasingly significant as fuel costs continue to rise.”
Prospects for the market look robust, given the trend towards growing your own produce. This has helped fan growth in the compost or, in the marketing vernacular, “growing media” market.
The Horticultural Trades Association, which monitors the sector, reported growth of 11 per cent in the total market for the year to March 2008, including 4 per cent at DIY superstores and 12 per cent at garden centres.
There is also scope for expansion through acquisition, although Mr Burns emphasises that these are likely to be smaller bolt-on purchases, which he finds less disruptive than bigger transformational deals.
Listing on Aim in 2006 made the cost of making acquisitions less prohibitive. This year it bought Joseph Metcalfe, which manufactures Gem composts and fertiliser, for £2.95m and it aims to bolt on further small acquisitions.
However, the success of Sinclair will always depend to some extent on the vagaries of the weather. The peat industry needs sunny and dry conditions for a successful harvest as well as for bringing gardeners into stores.
“I have never been so weather obsessed since I had this job. I look at the five-day forecasts for different locations around the country. The weather is bad at the moment, but it’s still better than last year.”
Copyright The Financial Times Limited 2008