The horse-meat debacle and the takeover of the Vion Food Group’s meat processing operations have taken their toll on annual results from food producer Boparan Holdings.
The holding company for the 2 Sisters Food Group plunged £33.5million into the red after interest, tax and exceptional items in the year to July 27, despite turnover climbing 23.3% to £2.884billion. It had in 2012 reported profits of £42.5million. Operating profits dropped 14.4% to £92.2million. But on a like-for-like basis – stripping out the addition of the Vion businesses – they fell just 3.9% to £103.5million. Like-for-like sales were up 5.6% at £2.447billion.
Chief executive Ranjit Singh said the business had suffered from the fallout of the horse-meat scandal and the plummeting demand for beef-based ready-meals. Profitability was also hit by Vion’s loss-making poultry operations.
He added: “Trading conditions have been very tough with inflation impacting cash-squeezed consumers and the impact of the horse-meat scandal on the food sector. By working with our customers we delivered good sales growth, although profitability was lower due to the impact of the headwinds in chilled (foods) and dilution from the Vion acquisition.”
Boparan said it remained focused on turning around Vion’s poultry processing operations and making them break even in 2014.
The Vion takeover included poultry sites at Coupar Angus, where there are 1,000 staff, and Cambuslang, near Glasgow.
The group shut three processing sites in the year and will next month close another chicken operation at Haughley Park, Suffolk, with the loss of 600 jobs.
Boparan said it was strengthening its management team with the appointment of chief operating officers for its chilled and branded, commercial and marketing, innovation and agriculture divisions. It also appointed a new agriculture director focused on improving quality and implementing its agricultural strategy across the business.
Mr Singh said the acquisition of Vion’s poultry and red meat processing businesses – which includes Portlethen’s McIntosh Donald where there are 300 staff – was strategic in that it increased group capacity in poultry for future growth.
Like-for-like operating profit in meat was slightly up on last year, despite a lag in recovering higher feed costs and competitive markets in the UK and Europe. Vion sales in the 20 weeks after acquisition were £365.2million and in line with expectations.
The group’s chilled food business suffered from the slump in ready-meat sales, being unable to recover higher commodity costs and what it termed an adverse sales mix. It was taking action to address these issues, but said profits could continue to be affected in the first half of the current year.