2 sisters organic chickens

Profits at 2 Sisters plunged almost 60% in its first quarter after the shutdown of its West Bromwich chicken factory in October.

The group closed the site for a month after media footage was released, suggesting a series of alleged food safety violations.

Operating profits at 2 Sisters fell 58% to £8.4m in the 13 weeks to 28 October as a result of the halt in production, as well as further margin pressures from rising commodity prices.

2 Sisters also slumped to an overall loss for the quarter of £6.6m, compared with profits of £100,000 a year ago. It follows a £17.6m loss in the final quarter of the previous financial year.

“Despite progress with price recovery and efficiency programmes, higher commodity prices and continued disruption following the suspension of production at Site D are proving difficult to mitigate in the short term,” 2 Sisters said in its outlook statement. “However, we remain cautiously optimistic that our change programme, coupled with a degree of softening in commodity prices, will improve our position as we head into the second half of the year.”

The West Bromwich plant implicated in an undercover exposé by The Guardian and ITV reopened in November after all its workers went through a retraining programme. The FSA also now has a permanent presence on site, and work on extending CCTV coverage and its continual monitoring is “well underway”.

Despite the problems caused by the scandal, group revenues in the first rose 3.8% to £849m as poultry volumes jumped thanks to an upgrade at 2 Sisters’ Scunthorpe facility, and its branded division, which includes Fox’s Biscuits, saw a like-for-like sales increase of 9.6%.

CEO Ranjit Singh said: “Despite the tough market environment, we have grown revenues during the first quarter and have worked hard to deliver for customers.

“As well as commodity inflation, our results have also been affected by the temporary suspension of operations at our poultry cutting plant. We are taking action now to improve margin performance and we should see the results of this coming through in the second half of the year, as we work through our plans to strengthen our business in all areas.”