2 Sisters continues to feel the chill as losses widen to £143m

BIRMINGHAM-based Boparan Holdings has warned investors profitability in the next quarter is unlikely to be as strong as the same period last year.

The company, the parent of 2 Sisters Food Group, said the outlook for the beginning of next year was likely to be tough both for the business and its customers.

To position itself from the worst of the situation the company said it would continue to take action to address its costs base, improve the efficiency of its manufacturing sites and make targeted investments which would help insulate the business.

The company itself is still in the midst of a major transition, orchestrated by the acquisition and subsequent integration of Dutch food group Vion’s UK poultry and red meat processing businesses.

The full impact of the transition was revealed in the company’s full year results statement. It said that in the year to August 2, 2014 losses had widened to £143.3m (2013: loss 33.5m).

It said the company had been adversely affected by restructuring costs and other exceptional items amounting to £101.1m (2013: £25.5m) and financial charges of £62.4m in relation to refinancing debt capital.

Stripping away the exceptional costs, the business enjoyed quite a healthy year, with sales up 18.5% to £3,419.2m (2013: £2,884.6m) and like-for-like sales up 2.4% to £2,868.7m (2013: £2,801.4m). Operating profit excluding exceptional items was down almost 3% at £89.5m (2013: £92.2m), while EBITDA (which is calculated on the same basis) was up 1.3% at £180.3m (2013: £178m).

It said its Protein division performed well and the integration of the Vion operations remained on track with the consolidation of a number of sites and the appointment of a new leadership team. Branded operations were also said to be doing well.

However, the Chilled division continues to cause difficulties for the group with sales down 8% for the full year and by 15.6% in Q4. At the half year stage the company took the decision to withdraw from its loss-making salads and cakes business and it said this had impacted full year performance.

Nevertheless it said the outlook was more promising.

“Recent business wins and new launches have reversed this trend in the first quarter of the new financial year. Building on this success, we will continue to improve efficiency, invest in our innovation capability and in capacity at Meal Solutions and our specialist bakery sites to provide a platform for future growth,” it said.

Ranjit Singh, CEO, 2 Sisters said LFL sales and operating performances had been satisfying given the nature of the transformation of the business.

“We have made a series of tough decision and taken action throughout the year to ensure we build a strong foundation for our business which will set us up for the long term,” he said.

“Investing in growth and lowering our cost base were the key themes of our operating focus over the past 12 months.

“We expect the economic environment to remain tough and we will work to deliver quality and value to customers. We are committed to investing in our bands, innovation and our people as we take the group to the next stage of its development.”