The loss of a key contract which threatened a processing factory in Fraserburgh took a large bite out of profits and turnover at Young’s Seafood in its last trading year.
Accounts released by Companies House yesterday show pre-tax profits at Grimsby-based Young’s plummeted to £718,000 during the 12 months to September 30, 2016, from £15.3million the year before. Turnover sank to £496.5million in the latest period, from £587.9million previously.
Young’s, which is owned by investors including HPS Investment Partners (UK), Bain Capital Credit and Lion Capital, said its 2015/16 figures were “heavily influenced” by the loss of a lucrative salmon contract with Sainsbury’s.
The supermarket transferred processing work worth £100million to fish farmer Marine Harvest in 2015, leaving Young’s plant in Watermill Road, Fraserburgh, battling to survive.
Young’s booked administration charges of nearly £6million in its 20014/15 accounts as a result of its eventual decision to scale back, but not shut, its Broch plant. The restructuring also hit profits that year.
In its 2015/16 accounts, Young’s said: “The lost contract impacted turnover and earnings from the latter part of the first quarter of the financial year, and was responsible for the drop in overall turnover.”
A “factory footprint exercise” launched after the loss of the Sainsbury’s deal delivered a cost benefit but also led to an exceptional charge of £3.8million on the balance sheet, it added.
Young’s Fraserburgh factory only escaped closure after hundreds of jobs were axed among a 900-strong workforce.
Budget chain Aldi later transferred some of its salmon processing to Young’s from Marine Harvest, creating new business for the slimmed-down operation.
Young’s, which in 2015/16 employed about 2,700 people across seven core manufacturing sites, is currently at the heart of speculation about a potential tie-up with fellow Grimsby firm Icelandic Seachill.
Icelandic Seachill is a leading supplier of prawn cocktails, party foods and fishcakes to the UK retail market. Its brands include The Saucy Fish Company range.
A merger of Young’s and Icelandic Seachill would unite the UK’s two largest seafood businesses.
But Tesco, Britain’s biggest retailer and a key customer, is rumoured to be lukewarm about such a deal.