Boparan boss blames profit fall on tough market

LFL operating profit fell by nearly 24% to £22M in the first quarter of the firm’s 2015 financial year. Operating profit was 17% down over the same period while LFL sales fell by 3.4% in the 13 weeks to November 1 2014. Total sales were nearly 9% down at £806.7M.

Singh said: “It has been a very challenging quarter for the food industry, with reduced volumes and price deflation, and this is reflected in our results. However, we have seen some solid individual performances within our divisions and encouraging signs of quarter-on-quarter improvements.​

‘Tough sales environment’​

“The tough sales environment we experienced in Protein in Q4 ​[the fourth quarter] has continued, but despite the challenges the business has delivered like-for-like growth in operating profit.” ​The division was continuing to restructure following the acquisition of Vion.​

Boparan’s Chilled business continued to stabilise, with sales broadly flat on a like-for-like basis. But the firm reported positive quarter-on-quarter improvements with the division moving back into profit. “Our brands have seen further pressures on sales mix and promotions, but overall sales are broadly maintained (down 1.3% LFL against last year),” ​said Singh.

The business had invested strongly in marketing and product quality – particularly in Biscuits – which had hit margins.

“Overall, we have performed consistently against the backdrop of a tough commercial environment. We expect conditions to remain tough, but we are firmly focused on delivering quality and value to our customers.”​

Continue cutting costs​

The transformation of the business was continuing, said Singh, who pledged to continue cutting costs, investing in brand promotion and improving the quality of the firm’s poultry products.

“We are building a better business by focusing on quality sales, and it is satisfying to report positive profit for the quarter with no exceptional charges.”​

The Boporan boss also highlighted the firm’s investment in the battle against campylobacter infection, which the Food Standards Agency (FSA) had acknowledged was “industry-leading”, ​he said.

Singh predicted the extremely tough trading conditions with customers looked set to continue. The group was also suffering from the impact of avian influenza outbreaks in the UK and the Netherlands and negative sentiment from consumers around the FSA campylobacter reporting. Both factors would combine to dent profitability in the second quarter compared with the same period of last year.

Meanwhile, 2 Sisters Food Group faced flak from the Federation of Small Businesses​ this week, after BBC’s Newsnight ​programme revealed a letter to suppliers warning they could wait more than four months for payments.