Poultry giant Avara Foods saw a big fall in turnover last year and a significant increase in losses as it contested with a major restructuring of the business and ongoing input cost inflation.
The supplier – which closed two processing facilities at Newent and Abergavenny, and opened a new added-value processing site in Wednesbury in the West Midlands – saw turnover fall by 11.7% to £1.3bn, according to accounts for the year to 31 May 2024, posted at Companies House.
Profits, meanwhile, took a big hit. One-off restructuring costs of £11.5m, coupled with additional operating costs “required to stabilise the transition of added value production” at its new facility contributed to a year-on-year increase in operating losses, from £266k in its previous accounting period to £43.2m.
Avara’s EBITDA fell from £33.2m to –£14m, while the processor’s total loss for the financial year grew by 353.9% to £49.3m, with a lag in the past few years’ increase in input costs also affecting its bottom line.
However, the business stressed that its slump in performance had been forecast as it shifted to “a more efficient and productive supply chain” capable of operating from a smaller footprint.
The results were therefore “consistent with a business in a strong financial position, with no bank borrowings and strong shareholder support – able to make and finance the difficult decisions in the short term, to ensure stability, growth and long-term success”.
As the business moved into the new financial year, it had “full headroom in its banking facilities and additional funds [worth £10m] from its shareholders to underpin investment” it said.
2023/24 had been “planned to be a year of change, but it was necessary to position us for the future”, said Avara CEO Andy Dawkins.
“We are already reaping the benefits in financial performance in FY25, which is running in line with expectations,” he added.
“While closing facilities and losing valued colleagues is never easy, we did this in the right way in line with our strong values. I am heartened by the opening of our new facility at Wednesbury, which has grown quickly on the back of strong customer support.”
Elsewhere, Avara said it had “embraced the well-documented customer-led initiative to rear birds to higher welfare standards”.
The timing of this development complemented the prior year’s restructuring of operational facilities by “further optimising agricultural supply and returning the industry towards an equilibrium between supply and demand”, it said.
“The hard work done on streamlining the business is now bearing dividends”, Dawkins observed, “putting us on track in a market where welfare, affordability and availability are all key priorities as we head into a time when UK food security and production will be more important than ever”.
As in previous years, “tough economic conditions” had not affected Avara’s commitment to be a responsible business, it stressed.
Pointing to its most recent For Good Annual sustainability report, Avara also reiterated it was making a continued reduction in carbon emissions ahead of SBTi targets and improvements across the board in areas relating to safety, food quality, welfare, ethical treatment of people and support for the communities in which it is based.
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