Potato storage problems hit UK profits at McCain Foods last year as the British arm of the frozen food giant managed to battle a stagnant category to grow sales.
Frozen potato market leader McCain Foods GB grew sales by 3.1% in the year to 30 June 2017 to £466.2m, from £452.3m in the previous year.
This sales growth of goods originating in the UK was up on last year’s figure of 2.8%.
However, an 8.6% jump in the cost of sales meant operating margin reduced from 13% to 10%. Operating profits declined by 18.1% to £48m, while pre-tax profits fell 26.3% to £47m.
The accounts explain that profits were hit by “potato quality issues” that arose during storage and resulted in increased purchases of market potatoes compared with the previous year.
McCain stated: “Despite these issues, we saw sales grow year on year and we announced a more than £100m investment in our North Yorkshire production facility.
“McCain GB continues to be an integral part of the McCain Group and as we look to the future, investment remains at the heart of our business to maintain brand leadership and continued growth”.
The accounts also stress a portion of the increased costs in the year represented significant marketing spend to support sales growth.
The Grocer’s Britain’s Biggest Brands report revealed last week that McCain has slipped to 18th place from 16th position as branded sales slipped 1.6% [Nielsen 52 w/e 30 December 2017].
In a category growing at just 0.3% [Nielsen 52 weeks to 2 December 2017] McCain has solidified its market leading position with the launch of Gastro Chips and Frozen Skin-On Fries last year.