Core operating profits plunged by more than two thirds last year at 2 Sisters owner Boparan, which would have posted an annual loss of over £100m but for the sale of the Goodfella’s brand.
The poultry giant’s newly filed consolidated annual accounts at Companies House show that pre-tax losses for the year to 28 July 2018 improved to £5.9m from £38.5m in the previous year on total sales up 1.5% to £3.34bn.
However, pre-exceptional operating profits dropped from £67.6m to £22.1m as margins plunged in its core poultry business. The accounts show EBITDA fell £42.8m to £118.4m in the period as shutdown of its West Bromwich ‘site D’ and delays in recovering commodity inflation hit its core business.
Sales in its protein division rose 3.1% to £2.34bn but pre-exceptional operating profit fell from £21.9m to a loss of £16.9m in the period.
Its subsidiary 2 Sisters Food Group, which has sales of £1.1bn, posted a pre-tax loss of £88.6m up from £37.7m and pre-restructuring losses up to £61.3m from £16.7m.
The wider group’s overall headline pre-tax loss was softened by exceptional gains of £30.8m owing to a £129.5m profit on the disposal of its £208.8m sale of its Goodfella’s pizza brand to Nomad Foods.
Stripping out the gain on Goodfella’s, 2 Sisters clocked up exceptional costs of £98.7m, including redundancy, disruption and closure costs of £34.2m and a £31.6m impairment of goodwill. It also made a £12.1m loss on the sale of its red meat business to Kepak Group as the £38.9m sale price was dragged back by a reduction of £47.9m of goodwill and assets and other costs of £3.1m.
Total losses for the financial period reduced fell to £0.7m from £37.7m due to the Goodfella’s sale and would have topped £130m without the M&A cash boost.
2 Sisters is likely to continue selling off non-core assets, having this year sold its Manton Wood sandwich business and its Green Isle and Donegal Catch frozen food businesses.
In Boparan’s most recent quarterly update to investors, it said operating losses in the 13 weeks to 26 January had increased from £0.1m to £2.9m as its poultry business was hit by “operational challenges” over the Christmas period.
CEO Ronald Kers said in March: “We remain on course with our business turnaround at our financial half-year point, and we have created the necessary impetus to start seeing results emerging in the following quarters.
“Lasting change and consistent performance will take time, but our strategy is gaining traction, giving us confidence in the business turnaround plan.”