£94m food group splashes out on US expansion
HULL food manufacturer Chaucer has paid the price of investing in the US but is optimistic that once established over the pond, the firm will be back on track after growing revenues 17% last year.
Broomco, the holding company for the three Chaucer businesses which include the bread, branded products and freeze dried divisions, reported a 17% increase in revenues to $139m (£94m) for the year to 31 December 2015, up from $118m (£79m).
However pre-tax profits dipped from $351,000 (£237,750), to a pre-tax loss of $3.3m (£2.2m).
GBP amounts have been calculated based on the exchange rates on 31 December 2015.
Chief executive Andy Ducker spoke to TheBusinessDesk.com and said that this was down to exceptional costs relating to the Hull company’s expansion in the US.
Underlying EBITDA was 20% higher in 2015 than the previous year and over the last three years it had made $26.8m capital expenditure investment as it looks to grow.
The company already operates B2B operations in the UK, Europe and Asia and over the past several years it has invested in international expansion, developing a manufacturing facility in Oregon to supply the US market.
Mr Ducker said that this opening was a principal driver of turnover growth prompting new US customers coming on board, as well as the growth of Chaucer’s bread division.
At the end of 2014, the group acquired Crunchies Natural Food Company in Los Angeles out of Chapter 11, similar to an administration in the UK. Chaucer said that 2015 had been a “repositioning and rebranding” year for the business and it has plans to bring the Crunchies brand to Asia, Europe and the UK in 2017 as it looks to make it a multi-million dollar brand.
Chaucer said that increase capacity and efficiency, as well as invest in the US market.
Mr Ducker said: “We have boosted our US capacity with a new factory in Oregon due to significant interest from US customers and are committed to doubling the capacity of this facility by mid-2017 thus greatly increasing our output and capabilities.”
As a large and international business, it had its eye on the Brexit decision in June. Mr Ducker said: “To date, we have not seen many changes in customer behaviour. We trade with most global food businesses and they still see the UK as an attractive place.
“For them, it is business as usual and trading activity continues to be strong. We are a truly global business. Only a fifteenth of our business is in the UK, with a limited proportion of our products supplied into and out of the UK. The depreciation of sterling is therefore an advantage if anything.
“I am concerned however about possible limitations on accessing the European labour force. We depend on some highly skilled people in Europe that we could not recruit in the UK so a loss of crucial EU talent could have an impact on us as a business.”
The company employs 150 people in Hull and a further 30 in Derby.
