Boparan Holdings to ‘improve margin performance’ following site closure

The temporary closure of 2 Sisters Food Group’s West Bromwich site has had an impact on its parent company’s margins for the first quarter (Q1). 

Boparan Holdings Limited, which owns 2 Sisters, filed its consolidated results for the 13 weeks ended 28 October 2017, on Wednesday, 6 December 2017. 

In addition to the closure of its site – which temporarily suspended operations due to a health and safety scandal – the report highlighted that commodity inflation was also blamed for damaging margins. 

Despite this, Ranjit Boparan, CEO of 2 Sisters, remains positive. After all, revenues continued to grow, with total sales up 3.8% to £849 million (m). Like-for-like sales also increased 3.1% year-on-year. 

“Despite the tough market environment, we have grown revenues during the first quarter and have worked hard to deliver for customers,” said Boparan.

“As well as commodity inflation, our results have also been affected by the temporary suspension of operations at our poultry cutting plant [West Bromwich]. We are taking action now to improve margin performance and we should see the results of this coming through in the second half of the year, as we work through our plans to strengthen our business in all areas.”

Strong volume growth in the poultry sector, assisted by a substantial upgrade of Boparan’s Scunthorpe facility, saw like-for-like sales in its protein division elevate 3.7% to £578.8m. This is being further boosted by cost reduction exercises in its red meat business. However, further inflation in other areas, coupled with the West Bromwich closure, has meant that this volume growth has been somewhat offset.

Meanwhile, the loss of a pizza contract has resulted in its chilled division reporting a drop in like-for-like sales of £156.m to £151.7m with like-for-like operating profit falling to £1.8m, down from £3.4m.

It was a mixed review for Boparan’s branded offerings, with like-for-like sales increasing 9.6%, although like-for-like operating profit reduced to £5.4m to £10.6m.

Higher commodity prices and continued disruption following the West Bromwich facility were “proving difficult to mitigate in the short term”, said the firm.

“However, we remain cautiously optimistic that our change programme, coupled with a degree of softening in commodity prices will improve our position as we head into the second half of the year,” concluded the firm’s report.

“We re-emphasise our position that our core businesses operate in attractive, growing markets and our broad reach means we can benefit from operational and commercial efficiencies. Our commitment to producing safe and quality food remains at the heart of the business, as does our determination to deliver a stronger overall position as the financial year progresses.”

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