Inspired Pet Nutrition confident after transformative Butcher’s deal despite widening losses

Losses have widened at Inspired Pet Nutrition ahead of the transformative acquisition by the private equity-owned petfood group of Butcher’s Pet Care.

Revenues, which have grown rapidly since CapVest took charge of the group in 2020, slipped 4.6% to £188.6m in the year to 29 June 2024 as IPN prioritised higher-margin brands over own label, newly filed accounts showed.

That focus on the Harringtons, Wagg, Barking Heads and Meowing Heads brands resulted in margins expanding from 26.3% in the prior year to 29.2%. However, the dip in sales meant adjusted EBITDA edged down by £1.4m to £21.7m, with the previous accounting period also benefiting from one extra trading week.

IPN said it had balanced margin recovery with increased levels of brand investment during the year, which resulted in the group building momentum to generate a final quarter EBITDA of £7m.

Branded gross revenues climbed 8.2% in the period, though this was slower than the 15.9% recorded in the previous year. IPN added the increased focus on its brands contributed to year-on-year value growth across the core ranges, with Harringtons up 10.9% and delivering market share growth, while Wagg rose 20.4%. Volumes at the two brands also increased 5.4% despite price rises.

CEO Arthur van Benthem, who was appointed last year to lead the newly enlarged group following the Butcher’s deal, said the results for the year reflected “positive progress and performance for IPN and our brands”, which, he added, had been sustained into the current financial year.

“This performance has been delivered despite an overall highly competitive and challenging operating environment, with significant inflationary pressures on various fronts, requiring an ongoing focus on solid procurement and cost management so that we can continue delivering the best quality products to our customers at a competitive price point,” he said.

Operating losses improved slightly during the year to £22.9m after accounting for non-cash charges totalling more than £40m for depreciation and amortisation.

Interest charges of £42.5m, including £36.7m related to bank loans, pushed up pre-tax losses at the group to £65m, compared with £47.8m in 2022/23.

“Our future reporting will reflect the acquisition of Butcher’s, which will have a transformational impact on the size, scale and capabilities of IPN and has created a phenomenal opportunity to innovate and grow IPN into a leading pan-European petfood platform through organic and acquisition-led growth,” van Benthem added.

The acquisition of Butcher’s, completed at the end of 2024, created a group with combined sales of more than £350m and brought together the leading makers of wet and dry petfood.

The latest accounts revealed that following the deal IPN increased an existing £209m loan facility by £90m and extended its maturity by two years to 2029. It also repaid £19.6m of revolving credit facility borrowings and interest as well as increasing the facility to £45m. And the North Yorkshire- headquartered group issued new shares worth £103m to finance the Butcher’s acquisition.