Duerr’s fearful of sugar rush

A TASTE for honey has helped to sweeten profits at family-owned jams and preservatives maker F Duerr & Sons, but the company has warned that a subsequent bubble in sugar prices could impact on growth next year.

Pre-tax profits at the Wythenshawe-based firm increased by more than 300% in the year to March 31, 2010 to £3m (2009: £741k). This was partly due to the fact that it had managed to successfully pass on cost rises to boost margins, while at the same time growing sales by 21% to £54m (£44.5m).

Sales and marketing director Richard Duerr said that the increase in volume could be attributed to a number of factors, although a significant rise in sales of both retail and industrial honey played a significant part.

During the year, the firm signed deals with two major supermarkets to provide them with own-brand honey ranges.

“It generated good volume, and it was all new business,” he said.

The firm’s net asset position at the year end also improved to £11.6m, from £9.8m. This was due to the purchase of a plot of land next to the jam facory during the financial year onto which it has subsequently built a peanut butter factory.

The factory, which has “been up and running since September”, replaces a facility at the company’s former base in Old Trafford, where it had previously operated for 115 years.

Duerr said that the site of the former Old Trafford works at Prestage St was subsequiently sold following its closure to a housing developer in October.

“Peanut butter is growing and there are some good opportunities in that market, but the price of peanuts has gone up by 20%,” he explains.

He said that the company had been forced to pass on such increases to its customers by increasing prices.

“We’ve lost a few bits of business here and there but most of the major ones have stayed with us. You can’t spend £2.5m on a factory like this if you’re not making any money.”

Duerr added that the company was facing a similar dilemma in terms of costs in its core jams business, as the price of sugar has recently climbed by 30% while glucose prices have jumped by 20%.

As a result, he said that the firm “won’t have such a good year” in the year to March 2011  as these have already eaten into margins. Again, it plans to pass these on as and when supply deals come up for renewal.

“When it makes up up to 65% of what you put in a jar there’s not much else you can do.”

The new factory is partly financed by a five-year medium-term loan agreed with its bank, National Westminster.