Average profit margin at Big 30 wholesalers squeezed to just 0.8%

The average pre-tax profit margin made by the UK’s 30 largest wholesalers is a razor-thin 0.8%, according to The Grocer’s latest Big 30 survey.

Sales have risen 3.1% to £26.05bn as 21 companies recorded a boost in turnover. However, profits have not kept up with sales and 18 companies recorded a slimmer profit margin than last year.

The overall margin was pulled down by the combined £118.68m loss recorded by Brakes’ parent company Cucina Lux, Makro and DBC. Among the companies recording a profit, the average margin was 1.5%.

At the top of the table, Booker and Bestway accounted for £128.4m, or 61%, of the Big 30’s total £208.9m profit.

Twelve of the 18 reporting a fall in profit margins were members of buying groups. Foodservice wholesalers fared worst, with DBC falling into the red and Cucina Lux incurring a £40m impairment charge as M&J Seafood’s trading failed to live up to expectations.

The £20m loss at Makro was a dramatic improvement on the £44.7m it recorded the year before, however. “Last year saw an intense period of restructuring within Makro and, as a result, the business is now in a much stronger position than it was six months ago,” MD Juergen Schwarze said.

Many wholesalers were now hoping for a strong summer. “We expect British to be flying high with both the Olympics and the Diamond Jubilee, which might provide us with a boost in consumer confidence mid year,” said 3663 managing director Alex Fisher.