2 Sisters hit by profits drop, despite sales rise
Published:  08 November, 2017

The parent company of 2 Sisters Food Group saw sales rise for the final quarter of 2016/17, but a fall in profits, and cautioned that the West Bromwich chicken factory closure would hits its first-quarter results in 2018. 

Boparan Holdings recorded a 5.3% rise in total sales to £815.7 million (m), with like-for-like sales rising by 3.5% to £802.2m, according to its fourth quarter (Q4) and full-year 2016/2017 figures. 

However, the company’s margins halved – falling from 3.8% in the fourth quarter of 2015/16 to 1.9% in Q4 2016/17, which resulted in a decrease in like-for-like operating profit from £29.3m to £14.8m respectively.

“The impact of commodity inflation was particularly acute in the quarter and price recovery, efficiency and targeted investments have not fully mitigated this in the period,” the report stated. “This will continue into Q1, which will also be impacted by the above-mentioned Site D [West Bromwich factory] issues.”

The West Bromwich poultry processing plant, which reopened this week, was temporarily closed for over a month following an undercover investigation by The Guardian and ITV News, which revealed poor hygiene standards and the altering of food safety records.

Measures introduced to rectify the issues included the appointment of full-time Food Standards Agency (FSA) officials to support the management team, extended CCTV cameras and the retraining of staff, prompting Marks & Spencer (M&S), Aldi and Tesco to once again accept orders from the factory.

Ranjit Singh, 2 Sisters Food Group CEO, claimed the business “continued to face an extremely tough trading environment with further increases in input costs”.

“Clearly margin performance improvement is a top priority, and this will be underpinned by working hard on the action plans that make the most difference to our core business,” he said in a statement.

“Nevertheless, we remain positive about our top-line growth and how that positions us with our customers. We continue to progress our poultry footprint changes, which delivers quality, safety and a shorter, leaner, more transparent supply chain. We are investing in our people and our sites, with a view to optimising available capacity.”

Singh said the meals division of the business had benefited from “rationalisation and investment”, which would also provide a springboard for further growth.

“However, as with our branded businesses, cost inflation has negatively affected margins, and our teams are taking ongoing actions to redress the balance,” he said.

“Whilst this will not happen overnight, our management team are focused on delivering our step-change plan, to enable us to continue on our journey of producing high-quality and safe food.”