KP Snacks has doubled its profits over the past three years amid record levels of food inflation, its latest accounts have revealed.
The owner of snacks including McCoy’s, Hula Hoops, and KP Nuts saw pre-tax profits rise to £94m in 2023, up from £45m in 2020. That came despite just a 31% rise in revenue over the same period.
Last year alone, pre-tax profits grew by £30m as the company increased its operating margin from 12.6% to 15.5%. Revenues climbed 14.8% to £627m in 2023, driven by its branded business.
KP CFO Giles Henderson attributed margin growth to several factors, including cost savings from investments in manufacturing facilities and reversing the impacts of the cyberattack in 2022 that floored the business for several weeks.
He told The Grocer: “Significant inflationary pressures in 2023 were recovered through a mixture of pricing, product mix, revenue management and cost saving strategies, alongside record investments in our marketing spend.”
KP brands saw some hefty price hikes in 2023, with the price of crisps such as Space Raiders rising by more than 50% in some retailers, analysis by The Grocer found.
KP’s product mix, meanwhile, saw brands grow ahead of own label through the year. The group’s branded volumes were flat in the period versus a 2.5% decline in the wider category. But Henderson said choices made on low margin private label nuts contracts meant KP’s overall volumes fell 2.5% last year.
The business still managed to boost market share, however, after its two biggest crisp brands, McCoy’s and Hula Hoops, were the only major crisp brands to grow volumes last year, up 3.3% and 1.9% respectively, according to NIQ [52 w/e 27 January 2024]. By contrast, larger rivals including Walkers, Doritos, and Pringles all saw volumes fall.
As a result of its improved financial position, KP Snacks increased its dividend from £36m to £50m last year.
In September last year, KP workers went on strike after rejecting a below-inflation pay offer of 8%, according to Unite. The union argued KP’s profits had almost tripled since 2018 while the average pay had fallen by 14% over the same period.
An analyst told The Grocer on background that while margins of 15% might seem high among British food companies, KP Snacks would sit in the middle of the pack among global brands.
“If you’re looking at the full picture of a branded snacking business, 15.5% looks a pretty sensible level for a decent portfolio of brands,” he said. “But it’s clearly grown a lot over the last four or five years. I think some of that is just the business doing a good job.”
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