Scottish frozen foods retailer Farmfoods posted a 4% drop in annual revenues last year as competitive pressures continued to weigh on the grocery chain.
Sales net VAT fell from £669.2m to £642.7m in the year to 31 December 2017. The sales drop was on top of a 3.6% fall in revenues in its 2016 financial year.
Farmfoods reached annual sales of £811.8m in its 2014 financial year before the rise of the German discounters and the mainstream supermarket price war hit sales.
In its most recent financial year operating profits rebounded 13.6% to £11.8m despite the headlines sales fall.
Pre-tax profits were up 20.4% to £11.1m.
However, Farmfoods’ profitability dropped markedly in 2016 – with operating profits down 47% from the £18.9m achieved in 2015 and pre-tax profits down 52% year-on-year.
The accounts’ strategic report stated: “Trading conditions have been and are expected to remain competitive.”
Despite the falling revenues, the group doubled its dividend payments to £6 a share from £3 a share in the previous year, totalling a payout of £450k.
During the year the company purchased 40,000 ordinary shares, representing 4.2% of its entire share capital, for £3.4m from MD Eric Herd.
Recent Kantar Worldpanel market share data suggested Farmfoods sales may be recovering from a sustained slump, with the retailer’s sales up 13.3% in the 12 weeks to 12 August and by 10.2% in the previous 12-week period to 15 July.
In the most recent Kantar Worldpanel period Farmfoods was growing more quickly than both Aldi and Lidl, which were up 12.6% and 8.6% respectively.
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