News that Uniq is set to lose desserts sales worth £10m annually at Minsterley is “clearly unhelpful” in light of the continuing uncertainty surrounding the firm‘s attempts to tackle the hole in its pension fund, said Investec Securities analyst Nicola Mallard.
However, the fact that bosses at the desserts, salads and sandwiches maker had also given the market a firm date (March 31) by which they aimed to deliver their proposed solution - a deficit for equity swap - was encouraging.
“Before they have not given a clear idea of when they were hoping to get this sorted, which has caused a lot of uncertainty for employees, suppliers and customers. But now they have given us a date in March, which is new.”
£100m turnover site
The £100m turnover factory at Minsterley in Shropshire, which employs around 780 staff and makes chocolate products, desserts and yogurts, has gone through a lot of upheaval in recent years, absorbing production from Uniq’s Paignton desserts factory and adjusting to new kit and working patterns.
The site, which at one point was making operating losses approaching £16m, has since made significant improvements in tackling waste and reducing costs, although there was still a lot of work to do, Uniq chief executive Geoff Eaton told FoodManufacture.co.uk. “I’m obviously disappointed by the loss of business, but we have also made a lot of progress at Minsterley.
“We had a very successful product launch in summer last year on the back of a tremendous amount of investment in consumer needs and in kit, but then the cream price doubled and we had to put prices up, and it has caused a lot of disruption in the market.
“As a consequence of that, we are still making losses in desserts.”
He declined to say which customer(s) were responsibile for the loss of trade – which will kick in from April – or how many jobs might be affected, but warned that the loss would have a negative impact on the site’s profitability in 2011.
The firm, which is already mid-way through a review of its desserts division, would provide an update in March, he said.
Overall desserts sales (including cottage cheese) at Uniq were down 1.7% in the fourth quarter, which Eaton blamed on “continued disruption to core sales” caused by price increases to cover rising input costs, lower Cadbury sales due to fewer promotions and the loss of cottage cheese volume.
Pension deficit
Meanwhile, discussions with the Pension Regulator, the Pension Protection Fund and the Uniq pension scheme trustee about a proposed deficit for equity swap to tackle the £436m hole in Uniq’s pension scheme were continuing, Eaton added.
“The Board is aiming to deliver the proposed deficit for equity swap outlined in our fourth-quarter update by March 31.”
The company’s proposals involve an effective transfer of 90% of the equity in Uniq to the trustee, in exchange for the pension scheme giving up its claim on the company.
Talks are also proceeding with Lloyds Banking Group for the provision of a £25m facility, subject to the successful completion of the deficit for equity swap.