Tough dough at Dr Oetker as profits tumble in tough trading conditions

Dr Oetker, the Leeds-based producer of frozen pizzas and baking products, has suffered a £8.6m dip in pre-tax profits which the firm says is partly due to increasing raw materials prices as a result of Brexit.

Publishing annual results to March 31 2018 on Companies House, the firm reported pre-tax profits of £18.6m, down from £27.2m. It saw turnover rise to £161m from £157m in the previous year.

During the year, Dr Oetker paid 7m in dividends – a significant drop from £20m paid in dividends in the previous year.

At the very start of the financial year, the firm acquired Scottish business Dilwara Properties for £4.9m.

Margins have been stretched “in part” by the raw materials costs rising due to Brexit, said Dr Oetker. The firm said it was maintaining its focus on supplying UK retailers, while developing the professional food service sector.

Dr Oetker said the increasingly competitive market was also a contributing factor. The firm added: “Significant focus continues to be placed on own label within the major multiples in markets where there is an increasing trend of consolidation and customers growing larger through acquisitive activity.

“Combine this with increased demands for more frequent and deeper promotional support, and with the slowing development of the grocery market, the result is a very tough trading environment.  When you then additionally consider the ever increasing influence and success of hard discounters, online and convenience shopping in the UK grocery markets, the trading picture become tougher still.”

Dr Oetker added: “Our business continues to be one of the leading manufacturers and retailers of both frozen pizza and baking ingredients and decorations in the United Kingdom. Market share across both sectors has been maintained in the last 12 months.”

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