Danish Crown-owned UK meat producer Tulip claims to have “put the brakes on” its decline after plunging to an operating loss of £21.8m in the past financial year.
Newly released accounts for the year to 30 September 2016 reveal a 9% drop in sales to £1.05bn, which Tulip said was due to the loss of a number of significant contracts, and a more than £40m fall in operating profits from £18.6m in 2015 to a loss of £21.8m.
Tulip admitted its 2016 results were “poor” as it posted a pre-tax loss of £29.7m from a pre-tax profit of £9.4m last year.
The group said lower demand and volumes had driven the decline, while profits were hit by lower margins due to raw material price pressures.
Tulip warned in September that “fierce competition in the retail market, increasing raw material prices, the loss of significant contracts and internal issues with productivity and pricing” would result in an annual loss.
It said a change in senior leadership, with Steve Francis put in charge in September 2016, followed by a restructure and the launch of a new strategy had “put the brakes on a decline in performance”.
After the change in leadership, Tulip was reorganised into four independent divisions - Tulip Agriculture, Tulip Fresh, Tulip Food Company (UK) and Dalehead Foods.
Francis said this week: “Our immediate priority was to launch a major rebuilding and performance improvement programme, focusing on restoring excellent customer service, re-empowering the manufacturing sites to become true customer-focused centres of excellence, and to focus on producing great products reliably and efficiently whist speeding up customer response times.
This rebuilding programme has progressed well: customer service levels have been restored and some important new contracts have been secured. I am pleased to report that the company is making great progress on its path to recovery.”
Sister company Danish Crown UK, primarily a UK sales and marketing arm of parent company Danish Crown, posted a 36% jump in sales to £280m in the year, driven by higher underlying commodity prices and the purchase of Tulip’s Bugle production facility in May 2015.
Pre-tax profits at Danish Crown UK fell from £11.3m to £2.6m largely as a result of an £8.3m compensation payment from Tulip relating to the factory transfer in the prior financial year.
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