Heck continued its recent growth last year with a 6.3% increase in sales for the 12 months to 31 July. However, it warned growing production costs were starting to impact the business and wider sausage category.
The North Yorkshire-based supplier saw year-on-year turnover rise by just over £1.6m to £27.7m, according to accounts filed at Companies House. Gross margin increased to 29.5% from 28.0% in the previous year, due to “efficiencies” and savings from automation.
However, operating profit almost halved, from £518,030 to £270,863, largely due to investment in the company’s first TV ad campaign and the impact of the “continued effects of Covid”, said Heck co-founder Debbie Keeble.
Overall, the business was in a strong position, said fellow Heck co-founder Andrew Keeble. But he warned the mounting costs seen across the food industry were now starting to hit home, with Heck seeing a £500,000 increase in labour costs over the past year due to an increase in the minimum wage.
Transport prices were up 15% over the past year and ingredients such as coconut fat had risen by 40% in recent weeks, he added.
“Pork prices have been low [during the sector’s well-documented backlogging crisis], but we expect they will rise,” Keeble said, adding such a move could have a negative impact on some sausage businesses that outsourced production.
But Heck – which had spent the past two years focusing on waste and efficiency throughout its manufacturing process, in addition to automation – was well positioned to ride out any further cost increases, he suggested.
“Unless you have complete control of production, you will struggle over the next two years,” he said. But Heck was now “the lowest priced packer” in the sausage category, he claimed. “So, when we do go to the retailers to ask for a price increase, we will have looked at every [cost] and already battened down the hatches.”
No comments yet