2 Sisters Food Group owner Boparan Holdings rebounded into the black last year – but the main 2 Sisters poultry business continued to post significant losses, latest accounts have shown.
Financial results posted at Companies House for the year to 30 July 2022 revealed Boparan Holdings saw a 5.6% increase in turnover to £2.76bn.
This increase was “entirely driven by inflation cost recoveries”, Boparan said, and helped convert an operating loss of £22.7m in the previous accounting period into a £34.8m operating profit – with performance in the second half of the financial year seeing an upturn after the group adjusted “to the more volatile environment”.
Adjusted EBITDA also rose, by 30.4% to £99.5m. But inflationary pressures drove up the business’s cost of sales by 4.8% to £2.4bn, with distribution costs rising by 11% to £354.5m.
A pre-tax profit of 52.6m in the previous accounting period fell to a £33.4m loss – which included a £20.5m loss from business disposals.
But sales in the wider Boparan poultry segment rose by 9.8% to £2.2bn, the accounts showed, with an operating loss before exceptional items of £13.4m rising to an operating profit of £22.3m. Boparan cited the performance of its EU poultry business as a key driver of this growth, with the impact of the war in Ukraine “expanding the local market opportunities of our Polish operation”.
2 Sisters’ Singh warns poultry supply chain ‘at breaking point’
However, accounts for the company’s UK 2 Sisters poultry subsidiary, also posted at Companies House, showed inflation had a significant impact on the business.
Turnover grew by 1.3% to £1.4bn, due to customer tender wins and NPD. Gross margin also rose, from 6.4% to 7.6%.
But in the face of strong inflationary pressures, 2 Sisters’ performance in the first half of the year was “significantly impacted”, particularly due to “the speed of increases in costs”.
This echoed warnings by former 2 Sisters CEO Ronald Kers in March 2022 that costs had soared, something 2 Sisters president Ranjit Singh reiterated this spring when he said the sector was at “breaking point”.
Performance in the second half of the financial year improved and benefited from the disposal of loss-making parts of its poultry operation at Derby and Sunderland.
However, the business still posted an operating loss of £29.5m (compared with a loss of £44.9m in the previous accounting period), while pre-tax losses stood at £93.8m (a slight fall of 1.8% on the previous year).
Despite these challenges, the wider Boparan Group stressed its performance had been “stronger” than in the previous accounting period.
But looking ahead to the current financial period, Boparan warned disruption to its agriculture base (due to last summer’s hot weather), would “result in a short-term ongoing impact due to the enforced delay to placing new birds on farms and the requirement to pull forward smaller birds into the UK poultry operation”.
This would have “a material financial impact in the new financial year”, it warned, while further cost inflation would need to be recovered via its customers, it added, pointing to the need for chicken prices to continue rising.
“We expect to see customer demand patters change to reflect the cost of living crisis and the group will need to adapt its operations to suit the new reality.”
No comments yet