2 Sisters warns over Brexit uncertainties

UK food giant 2 Sisters has warned of the “uncertainty” leaving the EU would place on the food sector as it announced further progress in its turnaround in the second quarter.

The UK’s biggest food & drink firm by sales saw operating profits in the 13 weeks to 30 January rise by over £26m from a loss of £4.3m in the quarter a year ago to £22.1m as its focus on stabilising performance begins to deliver improvements.

Like-for-like sales increased 0.4% to just over £800m while pre-tax profits jumped to £20.3m from a loss of £7.6m as the business went through heavy restructuring in 2015.

2 Sisters CFO Stephen Leadbeater said the “encouraging” performance had been achieved despite the “tough retail environment” but warned that a vote this year to leave the EU could put further pressure on the sector.

“The problem with Brexit is no-one really knows what the impact of it is going to be,” he said. “The UK economy and our business needs stability going forward. It’s the uncertainty - both economic and regulatory - that could be there were we to exit the EU that we would prefer to avoid.”

Total sales for the period were down 0.6% to £792m as price deflation and currency headwinds, given its euro-denominated revenues in Ireland and the Netherlands, dampened underlying sales growth.

Like-for-like sales in the protein business, where it is investing £150m in its poultry supply chain, were flat at £530.7m but a loss of £7.7m had been transformed into a profit of £7.1m. The chilled business saw like-for-like sales growth of 0.8% to £165.7m. Branded sales rose 4% to £103.7m.

2 Sisters is understood to be in talks with Burton’s Biscuits over the sale of its Fox’s Biscuits division, but Leadbeater declined to specifically elaborate on the talks. “There may be at times parts of our portfolio that could be a better fit with other people’s strategy than ours,” he said. “If that were to be the case we would always listen to any offers.”

Fox’s saw strong performance over Christmas, with market share growing 1.5% year-on-year over the period.

CEO Ranjit Singh said: “In this quarter we are seeing signs of our strategy to build a better business starting to deliver. There have been important successes throughout our business with new wins and new product development, with notable achievements across our divisions.”