Chaucer sees earnings rocket as it opens new US facility

UK-based global ingredients supplier Chaucer has posted a 33% jump in earnings in the year it was bought by Japanese food group Nagatanien.

Currency fluctuations meant reported sales at the freeze-dried fruit supplier fell 0.9% to $138m (£106.4m) in the year to 31 December 2016, but underlying sales grew by 2% supported by the opening of its plant in Portland, Oregon and winning new accounts.

Operating EBITDA jumped 33% year on year as its US footprint increased. Chaucer said the Portland facility had already opened up new market opportunities.

The US accounts for about half of Chaucer’s current sales and non-UK sales almost 80% of revenues - with global customers including Kellogg’s and PepsiCo.

Chaucer posted a pre-tax loss of $1.3m compared with a loss of $3.3m in the prior year, but this was heavily affected by exceptional charges of $4.8m largely related to the December 2016 acquisition by Nagatanien.

The focus of Chaucer’s business is shifting further away from the UK, with sales in its home market down from $38m to $28.2m last year. CEO Andy Ducker said significant opportunities remained. “The US market is growing incredibly rapidly in the natural food ingredient space.”

“Clean label and the whole health and wellness arena in North America has huge momentum behind it and our products are very much on-message for those trends.” The group will double its US manufacturing capacity from Augustand Chaucer is already considering its next stage of capacity expansion in 2019.

He added it was looking at globalising its Hull-based bread business, supported by the low value of the pound as well as new product ranges, with opportunities for healthy baked products particularly in North America.

Chaucer’s historic focus on cereals continues to widen, with new business in snacking and confectionery won across Asia and Europe and product development across beverage, confectionery, baking and healthy snacking sectors.

Ducker said the partnership with Nagatanien had been “everything we hoped for” and had enabled the group to further accelerate its growth and investment plans.

“The business has started 2017 very strongly and Nagatanien are supportive of both the plan that we have and are backing that up with the investment necessary to help accelerate it.

“We do feel in this space that there is a race to get there for these natural food ingredients businesses - those that can really get market penetration now with some of the key food manufacturers globally will be the ones whose products become established in this whole food transition process we’re going through, not just in Norther America but globally.”

Chaucer was acquired by the Japanese instant food producer in a deal worth more than $120m (£95.4m) in December 2016.