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Like for like profits jumped by 42.4% in 2 Sisters’ first quarter, driven by continued improvements in its core poultry division and improved trading in its biscuits and bakery businesses.
Like for like sales in the 13 weeks to 26 October rose by 0.6% to £662.7m, though total sales were down 4.4% in the period due to a number of divestments.
2 Sisters said its UK poultry turnaround continued in the period, while EU poultry performed well.
It also saw improved performance in ready meals business, while its bakery division benefitted from its cost cutting programme, divisional integration and commercial initiatives.
In poultry, underlying like-for-like sales increased by 3.1% with EBITDA up by £1.5m.
Ready meals saw like-for-like sales fall by 2% but EBITDA ruse by £2m, while bakery saw a 5.5% like-for-like sales jump with EBITDA up by £3.2m.
Total like for like EBITDA was up 42.4% to £22.5m, with like for like EBITDA margin up from 2.4% to 3.4% in the period.
Net debt reduced by 13.5% year-on-year to £581.9m.
During the period it sold its Matthew Walker business for £67m and “continues to focus on realising value from non-core assets”.
CEO Ronald Kers commented: “Our new financial year starts with another quarter of double-digit like-for-like earnings growth for the group, providing more evidence that the positive actions we have made in previous quarters are paying off. Turnaround outcomes are being realised and we’re seeing improved margin performance and encouraging performance in all our divisions.
“Recovery across our Group continues and the unrelenting focus on cost control, reduction and cash generation is bringing more positive results and gives the business a strong platform for this new financial year.
“Our UK Poultry operation is seeing further evidence of turnaround, our EU business is expanding for the future, and all divisions have seen EBITDA benefits as a result of positive commercial initiatives, efficiency improvements and overhead reductions.
“We have concluded the consultation period on the Pennine Meals factory and we will proceed with closure plans prior to the end of our financial year. These are the right actions to take and our priorities remain improving core business performance, strengthening the balance sheet, and focusing on cash generation.”
Morning update
McDonald’s is the latest UK fast food giant to tap into demand for vegan products as it is set to launch a vegan meal across its restaurants in the New Year.
The BBC reports that McDonald’s will release a Veggie Dippers meal - including vegan nuggets served with chips and a soft drink - launched in the UK on 2 January.
McDonald’s new dippers are made of rice, red peppers, tomato pesto and split peas, fried in breadcrumbs.
Its McVegan burger is available in Finland and Sweden, but is yet to launch in the UK.
McDonald’s told the BBC it had seen an “80% uplift” in customers ordering vegetarian options over the past 12 months.
McDonald’s is currently trailing a partnerships with Beyond Meat in a number of its Canadian restaurant.
New research from investment bank suggested the chain is selling only 20-30 plant-based Beyond Meat burgers per day in its trail restaurants, though sales are reaching 100 per day in busier outlets.
The slow update of products has hit Beyond Meat’s share price momentum, with the City concerned about the long-term popularity of the burgers and the ability to scale them to be commercially viable.
However, UBS said its figures suggested McDonald’s could eventually sell more than 250m vegan burgers annually if rolled out across its nearly 14,000 US outlets.
UBS said this would drive sales of $325m (£253.3m) annually for Beyond Meat.
“”We believe Beyond Meat has a first-mover advantage - for now - but it appears a door remains open for McDonald’s to refine its P.L.T. offering before introducing a plant based patty in the United States,” UBS stated.
On the markets this morning, the FTSE 100 has risen 0.2% to 7,230.2pts in early trading.
Early risers include SSP Group (SSPG), up 2.7% to 654p, Devro (DVO), up 1.8% to 169p and Glanbia (GLB), up 1.2% to €10.32.
Fallers include Pets at Home, down 1.6% to 263.6p, PayPoint, down 1.4% to 947p and Bakkavor, down 1.3% to 140.6p.
Yesterday in the City
The FTSE 100 recovered from a downbeat start to the day to end trading 0.3% down to 7,213.8pts.
The recovery from morning falls of nearly 1% came despite weak UK economic data finding the UK economy failed to grow over the August-October period.
McColl’s (MCLS) shares dropped a further 4.7% back to a new all-time closing low of 39.4p after admitting its profits would be below expectations because of tough economic conditions in the UK and the poor summer weather.
All three listed supermarkets were down after grocery market share data showed falls in their 12-week sales, with Morrisons (MRW) – the worst performer in the market share data – down 3.3% to 197.2p, while Sainsbury’s (SBRY) dropped 1.4% to 220.4p and Tesco (TSCO) fell 1.2% to 240.3p.
Other faller included Glanbia (GLB), down 4.1% to €10.20, SSP Group (SSPG), down 2.6% to 637p, Britvic (BVIC), down 2.2% to 921p, WH Smith (SMWH), down 2% to 2,422p, B&M European Value Retail (BME), down 2% to 388.3p and Cranswick (CWK), down 1.7% to 3,152p.
The day’s few risers included Pets at Home, up 2.4% to 267.8p, Greencore (GNC), up 2.2% to 259.3p, Mothercare, up 1.9% to 13.7p, Eagle Eye Solutions, up 1.7% to 182.5p and Reckitt Benckiser (RB), up 1% to 5,999p.
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