Typhoo Tea has suffered another year of heavy losses as it struggled with a turnaround, but the brand’s new CEO said the business continued to make “positive progress” in its transformation.
Pre-tax losses at the group – which celebrates its 120th anniversary this year – totalled £8.5m in the year ended 30 September 2022. That’s slightly down on the £10.5m registered in the previous 18-month financial period.
It takes losses at Typhoo to almost £85m since 2017/18.
Revenues also continued to decline at the tea maker, down to £33.7m versus £54.6m in the previous 18 months – a 7.5% fall on an annualised basis and significantly below 2014/15’s £82m.
Directors said – in the Companies House accounts – they were “confident” of a return to profitability in the “near future”.
Typhoo has been battered by weakened consumer demand for black tea in tandem with Brexit challenges, currency headwinds and soaring raw material prices.
However, CEO Andrew Reardon told The Grocer that Typhoo continued to make “positive progress” as it neared the end of a “transformation journey”.
“The year-on-year business results reflect the major constructive changes we have implemented over the last year to accelerate growth and we expect to see this reflected in the short to medium term,” he said.
“We continue to restructure the company while getting it fit for long-term growth and would like to thank all our colleagues who have helped bring about the much-needed business transformation. This hard work has put us on a positive trajectory and will allow us to continue our journey to a sustainable business model.”
Reardon was appointed by London-based private equity firm Zetland, which acquired Typhoo in 2021, as chief transformation officer in May 2022 before he took the reins as CEO in April this year, the accounts revealed.
Part of the transformation involved the closure of Typhoo’s lossmaking Merseyside factory in a bid to cut spiralling energy and other input costs.
The new Companies House accounts highlight a change to the company’s operating model to a fully outsourced operation using tea packers in Sri Lanka, Africa and the UK.
Just 22 employees now work in a hub in Birkenhead, which opened on 3 July. Staff numbers are down from 115 earlier this year and almost 300 in 2020.
Typhoo also focused on product rationalisation and the exit of lossmaking contracts, the accounts added.
Zetland made further investment during the year to support the challenging trading period and the accounts revealed the group received an additional £16.1m loan from “a related party”, with interest charged at 15% a year.
Reardon said: “We have very exciting plans for Typhoo Tea that will place consumers’ values at the centre of everything we do. With the continued support of our shareholders and the increased demand for our products, we are optimistic about Typhoo Tea’s future.”
The transformation plan put in place in August 2022 involved an £11.8m investment to further restructure the factory and office workforce, upgrade key machinery and introduce new equipment and automation to streamline operations, according to the accounts.
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