Q3 results published

The headlines are: revenues remain strong in a tough market; total sales up 4.8% to £821.9m,  like-for-like sales up 3.1% to £809.0m, protein division reporting strong sales progress year-on-year, like-for-like operating profit at £13.1m; affected by one-off items, results impacted by cost inflation, avian flu in Europe and disruption and redundancy costs, working closely with customers on inflation price recovery; realised in part from April onwards, efficiency and cost reduction programmes accelerating, and innovation and investment streams on track.

Ranjit Singh, 2 Sisters Food Group CEO, said: “This was a tough trading quarter for the business, but there are clear signs in the top line performance that we are pursuing the right strategy to deliver sales and margin performance improvements.”

The competitive landscape remains challenging and our sector faces currency fluctuations which have brought about higher input prices. In addition, the European poultry export business in both Poland and the Netherlands has been affected by Avian Influenza outbreaks on the continent, and they have experienced some restructuring costs elsewhere in the business.

The Protein footprint programme is progressing well and will ensure we have the right product, in the right location at the right time. Latest developments include expanding the cutting facilities in Scotland and reconfiguring the supply chain to achieve a leaner structure. Following Consultation, the company has announced the closure of one of our Birmingham sites. They have also strengthened the commitment to reduce poultry waste by agreeing a three-year surplus supply contract with Crawshaws Butchers.

Overall like-for-like sales in the Protein division in Q3 were up 4.8% at £566.8m (Q3 2015/16: £540.8m). Operating profit was down by £2.2m to £6.7m (Q3 2015/16: £8.9m), driven by the impact of Avian Influenza on the European Poultry business.

Primal poultry continues to enjoy strong underlying volume growth, in addition to Ready-to-Eat products and Added Value breaded lines enjoying new category growth. During the quarter, there were concluded long-term supply contracts with three strategic customers which will deliver significant volume increases.

The Chilled division saw flat like-for-like sales of £148.0m (Q3 2015/16: £148.8m) and the company incurred a small operating loss of £0.3m (Q3 2015/16: £2.9m profit), largely as a result of disruption following the loss of a Chilled Pizza contract.

Contributing to a stable sales performance against the inflationary backdrop was the ongoing efficiency investment programmes, delivering improved product quality at lower operating cost and growing sales with customers in different segments of the market.