Karro Food Group has returned to profit after a turnaround plan “fully transformed” the British pork supplier three years after it was sold by Vion.
Karro posted a pre-tax profit of £12.5m in the year to 26 December 2015, having recorded a loss of £12.2m in 2014.
The Karro pork business, which trades as Karro Food Ltd, also recorded a pre-tax profit of £5.1m after many years of losses. Pre-tax losses at the then-larger pork producer peaked at £49m in 2012 under previous ownership.
Di Walker, chair of Karro Food Group, hailed the group’s transformation following its acquisition from Vion by private- equity house Endless three years ago.
“2015 marked the group’s full transformation from a business undergoing a turnaround to a strong, dynamic and well-respected player in the domestic and international pork market,” she said.
Karro Group, which includes Northern Irish butchers McGees Foods and Karro Frozen, saw EBITDA improve by £18.6m during the year to £26.6m.
However, the jump in profitability comes despite a 13.3% plunge in group revenues from £527.7m to £457.7m, which Karro said reflected the impact of declining pig prices.
However, this revenue drop was negated by a 20.9% drop in raw material expenses from £345.5m to £273.4m.
The earnings improvement was also driven by a major investments, including a new innovation centre and modernisation of packing lines, which helped lower production costs and increase product quality.
“We continue to build further on our very strong commercial relationships in the UK and globally, and through ongoing significant investment in the business our production facilities are industry best in class,” Walker said. “These investments have enhanced our manufacturing capabilities, widening the product offer for the benefit of Karro and its customers.”
Despite the drop in pig prices, Karro’s exports held up after rising 4% to £70.7m, with non-European sales rising by more than 80% to £15.2m. This represents a leap in the proportion of revenue that come from non-UK sales, rising from 12.9% to 15.4% of total group revenue.
Walker said Karro remained “well placed” to cope with the strong competitive pressures in the UK pork industry.
The company expects to see further profitability progress in 2016 and a return to revenue growth and further operational efficiencies.
Karro Group was created as an independent company in January 2013 following Endless’ backing of an MBO to split off Vion’s UK pork business.
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