Transformational Year For 2 Sisters Food Group
Reflecting its acquisition of Vion Foods, 2 Sisters Food Group, the UK poultry and food manufacturer, increased sales by 18.5% to £3.419 billion for the 53 weeks ended 2 August 2014. with like-for-like sales advancing 2.4% to £2.869 billion despite the tough trading conditions. Like-for-like operating profit increased by 5.9% to £97.3 million but total full year pre exceptional operating profit was behind last year at £89.5 million, including a full year impact of the Vion business, which was loss making at the time of acquisition in March 2013.
2 Sisters has a strong UK presence in the poultry, red meat, chilled and frozen food categories, and is a major branded player through its Fox’s Biscuits and Goodfella’s Pizza operations. The company produces a third of all the poultry products eaten in the UK.
In total, full year operating margins declined from 3.2% in 2013 to 2.6% as the group increased its weighting to the Protein sector, following the acquisition of Vion, which traditionally operates with lower operating margins than the group’s Chilled and Branded operations.
2 Sisters reported a loss for the year after interest and taxation of £143.3 million – significantly higher than the £33.5 million loss in 2013 – after incurring restructuring costs and other exceptional items amounting to £101.1 million and financial charges of £62.4 million in relation to refinancing the group’s debt capital.
The Protein business reported a strong sales performance and pre-exceptional operating profit of £69.1 million as the Vion integration remained on track. The Branded business continued its turnaround during the year, reporting a pre-exceptional operating profit of £25.8 million. However, Chilled sales were down 8.0%, reflecting the difficult trading environment and business exits, and a pre-exceptional operating loss of £5.4 million was recorded
Ranjit Singh, chief executive of 2 Sisters Food Group, comments: “Our like-for-like sales and operating profit performance are satisfying after a transformational year for our business. We have made a series of tough decisions and taken action throughout the year to ensure we build a strong foundation for our business which will set us up for success in the longer term. Investing in growth and lowering our cost base were the key themes of our operating focus over the past 12 months.”
He continues: “In Protein, we completed the investment and consolidation of cooked meats at Cambuslang following the closure of Haughley Park in H1, although we still have efficiency improvements to make. We progressed our cost reduction plan in Scotland, consolidated production at Coupar Angus and exited the Letham poultry site. Our Chilled business announced exit from loss making salads and cakes businesses and we invested in capacity for growth in Meal Solutions and our specialist bakery.”
He expects the economic environment to remain tough as 2 Sisters continues to transform its business by improving efficiency in Protein, driving Brands performance and stabilising and turning around its Chilled business.
