Tough trading conditions, driven by price deflation and “historically low” export and wholesale prices, saw poultry processor Faccenda Foods fall into the red for the year to 30 April 2016.
Statutory profit fell from £9.5m in the 2014/15 financial year to a loss of just over £642,000, according to latest accounts filed at Companies House.
Turnover fell by 0.5% from £526.1m to £523.5m, while pre-tax profit fell from £13.8m to £866,000. Operating profit fell from £11.1m to £7.7m.
The company also reported a one-off impairment cost of £6.4m as part of a restructuring of its duck processing subsidiary Cherry Valley Foods, which was acquired in 2015.
The business had endured challenging conditions during 2015/16, said its annual report and accounts, with the combination of currency fluctuations, fierce competition in the UK retail sector and oversupplied markets also materially affecting profitability.
The outlook for the coming year remained challenging, it added. Weaker export and wholesale markets were not expected to recover until supply and demand rebalanced across Europe, the report warned, while political and economic uncertainty in the UK would “also be a factor in the year ahead”.
However, Faccenda continued to invest in its supply chain, said MD Andy Dawkins. It ploughed a £6m investment into new fresh despatch facilities, a further £1.5m in additional campylobacter controls and £7m in sustainable biomass-fuelled heating across its farming estate.
“I don’t think it’s been an easy year for anyone in the industry,” said Dawkins. “Export and wholesale prices are at historic lows, the market is as competitive as it has ever been, and these, combined with higher feed and fuel prices due to currency fluctuations, have unsurprisingly put pressure on our margins.”
In the face of these headwinds, the business had “held up well”, Dawkins insisted. “Our balance sheet remains strong and we are well positioned in growth markets. Regardless of the prevailing economic conditions, some simple rules hold true: focus on your people, focus on your customers and focus on the long term. We’ll continue to do this in the year ahead.”
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