2 Sisters is a profitable business, despite its £143m loss last year, and remains well on the road to recovery, its CFO has insisted.
Speaking exclusively to The Grocer, Steve Leadbeater, who became CFO in June 2014, said the group was “cautiously optimistic” about the future and expected to see progress in all three divisions in the next two quarters.
“We’re a profitable business, and if you take into account exceptional costs and one-offs, all our divisions are profitable,” he said.
2 Sisters boss Ranjit Singh said at the time of the final results in the year to 2 August 2014 that the year had been “transformational” as the company sold factories, closed businesses and refinanced its debt.
After posting a profit in the first quarter of the new year, the group revealed this week it had fallen back into the red in the 13 weeks to 31 January, recording a pre-tax loss of £7.6m as a result of exceptional charges caused by the outbreak of avian flu in Europe and problems with a new IT system. Sales fell 6% to £797m in the period.
Singh warned conditions for the wider group would remain difficult throughout 2015 as the supermarket price war created the “toughest commercial environment” he could recall for many years.
However, it wasn’t all bad news as like-for-like sales in the chilled division climbed 2.9%, with operating profits improving as the business continued its post-restructuring recovery.
2 Sisters is seeking to capitalise on the growth of the chilled sector in general as burgeoning consumer confidence begins to help the industry emerge from the shadows of the 2013 horsemeat scandal.
Leadbeater said customers had responded positively to the launch of more than 100 new lines after the group set out to reinvigorate its ready meals business in early 2014, A new leadership team, led by divisional managing director Ian Toal, a turnaround specialist, had also helped make a “positive impact”, he added.
“The chilled sector is burgeoning and we’ll be doing everything we can to capitalise on this,” he added. “For us, the key to future success will be innovation and making sure we’re one step ahead of trends and tastes.
The outlook is more difficult for the branded division as the supermarkets continue their war on price. Leadbeater said he is “confident” in the depth of its ranges. “Our reach across the majority of UK retail and food service sectors means we’re very well placed to ride out any volatility with pricing activity.”