2 Sisters slipped back into loss in the second quarter as rising input prices slashed margins at the UK food giant.
2 Sisters owner Boparan this week reported a £2.5m loss after exceptional items, interest and tax for the three months to 28 January, down from a profit of £1.7m in the same period last year.
The loss, its first since posting a second-quarter loss of £16.7m two years ago, occurred despite a rise in overall sales by 5.2% to £833m and a 2.6% boost to like-for-like sales to £812.8m.
CEO Ranjit Singh pointed to post-Brexit currency fluctuations that have raised input prices. “It is unsurprising that this has put a margin squeeze on a lot of businesses,” he said.
Like-for-like operating profit fell 17.8% to £18m, from £21.9m last year, and operating profit margin decreased by 50bp to 2.3%. Net debt was up 11% to £763.2m.
Boparan’s branded division saw the biggest cost inflation during the quarter, driven by commodity and currency impacts.
In particular, it has taken action in its Fox’s Biscuits business to cope with rising costs and has “engaged with our customers” to seek price rises or change pack configurations. The group has also streamlined management and support structures at Fox’s factories and driven improvements in waste and efficiencies.
Its group-wide efficiency and cost reduction programmes are also being accelerated.
“Competing in our markets requires investment for the long term, so our supply chain is efficient, sustainable and fit for the future. This has been our approach when making investment decisions,” Singh said. He added: “There is underlying positive momentum across the business… sales are rising, and we are well positioned to grow with our customers in new markets.”