Cost inflation sours sweet maker Tangerine Confectionery

A SURGE in raw material costs and a tough consumer environment hit profits at Butterkist Popcorn manufacturer Tangerine Confectionery.

The Blackpool-based group, which was sold to US-based private equity investor Blackstone last year , said ebdita had fallen 17% to £14.3m in 2011, and operating profits  slid from £11.3m to £6.9m.

The bad news was sweetened by a near 2% increase in turnover, from £153.8m to £156.6m as a result of higher export sales to Europe in the year.

While the UK – by far Tangerine’s biggest market – saw flat sales of £143m –  sales to Europe rose from £7.6m to £10.7m. An export deal agreed in January this year is expected to deliver significant sales in Australia in the coming years.

Tangerine calculates its Australian exports will reach 70,000 cases of stock including three million Sherbet Fountains annually.

The company employs more than 1,200 people at its manufacturing sites across the UK. It has around 400 in Blackpool, a marshmallow manufacturing site in Liverpool and four factories in Yorkshire, at York, Cleckheaton and two factories in Pontefract.

Chairman Steven Joseph said that despite the fall in profits in a “very challenging year”, Tangerine had emerged as a stronger business.

“On the trading front, Tangerine Confectionery put in a solid performance in 2011 in an exceptionally difficult environment. A continuation of a period of weak demand and consumers demanding value for money was exacerbated by quite extraordinary inflation in the cost of key raw materials throughout the year.

“Although price rises were implemented, they did not fully recover the cost escalation as they had a delayed impact and had to be kept to a level that the customer could afford.”

As well as the Butterkist brand, Tangerine – which also makes own brand sweets for a number of major grocers – owns the Barratt wine gums, Henry Goode soft liquorice and Princess marshmallows brands.

This year it has added Wham bars, Highland Toffee, travel sweets brand Smith Kendon and York Fruits to its range.