Profitability slumps at 2 Sisters Food group
The burden of taking over Vion earlier this year has made itself felt in annual results for leading poultry and food company 2 Sisters, just published.
Figures for the year to 27 July show group turnover climbed by 23% to £2.88bn, largely due to the acquisition of Vion’s UK poultry and red meat businesses on 8 March. In the ensuing 20 weeks, sales from the Vion businesses came to £365m.
But operating profit over the 12 months as a whole slumped by 14% to £92m.
“Trading conditions have been very tough, with inflation impacting cash-squeezed consumers,” said chief executive, Ranjit Singh. “By working with our customers we delivered good sales growth, though profitability was lower due to the impact of the headwinds in (our chilled foods division) and dilution from the Vion acquisition.”
“We expect the economic environment to remain tough and we will work with our customers to deliver quality and value to consumers, invest in our brands, in innovation and our people, and improve efficiency.”
Ranjit Singh, 2 Sisters chief executive
Mr Singh described the Vion takeover as “a strategic acquisition”, which would increase capacity in poultry for future growth. “Whilst Vion poultry is currently loss making, we have started to implement our integration plan and aim to get the business to break even in 2014,” he said.
Stripping out the “Vion effect”, like-for-like sales for 2 Sisters were up by 5.6% to £2.45bn, while operating profit was down 4% to £103m – indicative of the tough trading environment
The protein division performed will, with like-for-like sales up 9% and profitability slightly ahead, “despite the delay in recovering feed inflation and competitive conditions in the UK and Europe”.
The chilled sector suffered, however, with the horsemeat scandal at the start of the year affecting beef-related ready meals, under-recovery of commodity inflation, and an adverse sales mix.
Mr Singh said the company was consolidating its manufacturing facilities to improve efficiencies, with three sites closed during the year. “We have also strengthened our leadership, with key appointments to the board.”
“We expect the economic environment to remain tough and we will work with our customers to deliver quality and value to consumers, invest in our brands, in innovation and our people, and improve efficiency.”
Closure confirmed for 2 Sisters Haughley Park site