Symington's sees £6m loss as cooking sauce brands struggle

Symington’s has slumped to a loss as a raft of delistings for the Chicken Tonight and Ragu brands led the ambient food manufacturer to restructure the group.

A cost-cutting drive included closing its small gravy and noodle factories in Yorkshire, reorganising shift patterns, slashing 50 head office jobs and selling its Australian business.

The £7.1m incurred for redundancy costs and stock writeoffs plunged the business into the red, with pre-tax losses of £6.1m in the 18 months ended 28 August 2016, new accounts reveal.

Underlying profits fell from £12.3m in the year to 1 March 2015 to £9.4m in the 18-month period.

Symington’s, backed by private-equity firm ICG since a £72m buyout in 2012, has struggled as consumers increasingly turn their backs on processed food in favour of healthier alternatives, and its supermarket customers battled with discounters Aldi and Lidl to regain market share.

Chicken Tonight and Ragu were two high-profile casualties in the troubled cooking sauces category, losing 18% and 32% of value respectively, as shoppers cooked more sauces from scratch, according to The Grocer’s Top Products Survey 2016.

Annualised group revenues slipped 17% to £117.2m (£175.8m for 18 months) as a result of the challenging conditions.

Symington’s achieved 15 years of consecutive growth until a slowdown in 2015, with sales growing from about £40m in 2007 when former CEO David Salkeld joined.

John Power, promoted to CEO in October 2016, told The Grocer trading had started to turn around thanks to the strategic review, with cost savings totalling “several million”.

He said Symington’s had returned to the black in the first half of 2016/17, and would remain profitable for the full year.

Power has trimmed the number of SKUs being produced to “focus on doing fewer things better” and concentrate on core ‘power’ brands Mug Shot, Ainsley Harriott, Ilumi and Naked Noodle.

“The team has worked hard to restructure the business to ensure its efficient and ongoing success,” Power said.

“Having taken significant cost out of the business, we have created a solid foundation for future growth. Our strategy of focusing on our core areas of expertise and our key brands such as Mug Shot, Ainsley Harriott and Naked Noodle is proving successful with brands seeing strong year-on-year growth.

“We remain very proud of our business and with the recent appointment of Matt Lee, our new chief commercial officer, we also have the right management team in place to take our business forward.”

Conditions remain challenging as the slump in the value of the pound since the June EU referendum and higher commodity prices pushed up input costs.

Power added the cost savings made after restructuring helped the business absorb some of the inflation, with prices hikes also passed on to the supermarkets.

“The cost pressures are just too big for anyone to absorb completely,” he said.

The sale of the Australian business in July 2016 helped reduced group debt by £20.5m to £29m, the accounts showed.