First-quarter losses at Boparan Holdings have more than doubled to £12.1m, but the group has signalled a “solid start” to the 2013/14 financial year after seeing like-for-like sales growth accelerate.
Like-for-like sales increased by 8.7% year-on-year, to £670.3m, in the 13-week period ending 26 October 2013. This is an improvement on the 7.7% year-on-year increase in Q4 of the 2012/2013 financial year.
“We have made a solid start to our new financial year in challenging and competitive market conditions as inflation continues to squeeze consumers’ spend,” said CEO Ranjit Singh Boparan.
In the group’s protein division, Q1 like-for-like sales increased by 20% year-on-year, driven by business gains and cost recovery in the UK and Europe, the company said.
Like-for-like operating profit was ahead of Q1 last year as a result of business gains and improved efficiency through investment in UK and Polish sites, it added.
The group continued to address its protein cost base by consolidating its Scottish poultry production.
“We have made a solid start to our new financial year in challenging and competitive market conditions as inflation continues to squeeze consumers’ spend”
Ranjit Singh Boparan
Chilled saw a marginal 1.6% increase in sales year-on-year, although operating profit was lower than last year, Boparan reported.
Commodity inflation, an “adverse sales mix” and disruption from product transfers were to blame for the fall in profit in its chilled division compared with Q1 last year, it said.
“We are taking actions to address chilled performance once Christmas is delivered for our customers and would expect to see the benefits coming through in the second half,” said Singh Boparan.
The group had closed its Haughley Park site and “invested with customers” to help “bring consumers back to beef ready meals”, the company added.
Q1 branded sales fell 3.8% year-on-year.
“New production introductions in frozen pizza and tight cost management improved results in frozen, but trading conditions remain tough, particularly in Ireland with increasing competition from discounters,” the company said.
The integration of Vion’s former UK red meat and poultry business was progressing “on plan”, Singh Boparan claimed.
The ratio of net debt to EBITDA stood at 3.18 in Q1 2013/2014, the same as for the full 2012/2013 financial year but up from 2.77 in Q1 2012/2013.
At 26 October the group had cash balances of £146.9m and its £40m revolving credit facility remained undrawn.
“We continue to relentlessly focus on cash and deleveraging, resulting in strong net cash inflow from operating activities of £27m (Q1 2012/2013: £2.1m) before interest, tax and capital expenditure as we tightly managed working capital,” the group said.
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