Boparan group reports 35% drop in third-quarter profits

The food empire of Ranjit Boparan Singh has seen a 35% decrease in Q3 profit after the horsemeat scandal, cost inflation and the weather conspired to take their toll on the group’s performance.

Like-for-like operating profit (before exceptional items) at Boparan Holdings – the holding company of 2 Sisters Food Group – stood at £20.3m in the 13 weeks to 27 April, £11.1m lower than in the same period last year.

Like-for-like sales over the period increased by 4.5%, to £624.6m.

The figures do not include the acquisition of Vion’s UK poultry and red-meat businesses, completed on 8 March.

The third quarter had seen good top-line sales growth but a weaker performance, reflecting the tough trading environment compared to a strong Q3 last year, the company said.

“We saw headwinds, following the consumer reaction to horsemeat in beef-related ready meals, alongside continued cost inflation and high margin pressure”

Ranjit Boparan Singh

Although not implicated in the horsemeat scandal, the company had felt the knock-on effects.

As the group had previously flagged up, “we saw headwinds, following the consumer reaction to horsemeat in beef-related ready meals, alongside continued cost inflation and high margin pressure as we invested with our customers to maintain sales growth in a highly competitive market”, Singh, CEO of 2 Sisters Food Group, said.

In the group’s protein division, like-for-like sales increased by 10.1% but operating profit margin was lower due to the time lag in recovering from the impact of higher feed costs, the group said.

In chilled, sales grew 2.5%, despite the impact of horsemeat on “beef-related ready meals” but profitability was lower because of horsemeat concerns, increased vegetable procurement costs caused by the adverse cold spring weather, and inflation, it added.

In branded, like-for-like sales fell 5.5%. The group said it saw a recovery in frozen foods but performance in biscuits was weak because of consumers switching to own label. 

Boparan anticipated inflation would continue meaning market conditions would remain tough. “The Vion acquisition is currently loss making and will dilute margin in the second half as will the consumers’ reaction to horsemeat on beef-related ready meals, albeit with a steady recovery,” the company said.

2 Sisters reduced net debt by 4.9%, or £29.3m, to £565.4m in the period – the acquisition of Vion did not affect the balance because it was paid for in cash.