Profits dented at potato picker

Scottish potatoes and daffodils supplier Produce Investments has seen its pre-tax profits more than halve after counting the cost of a product recall and the closure of a packing facility in Kent.

But the Berwickshire firm said revenues for the year to 25 June rose 3.7 per cent to £185.1 million despite “challenging” market conditions. That increase in sales helped profits at the operating level grow 14.6 per cent to £9.2m, which chief executive Angus Armstrong described as a “robust” performance.

Analysts at house broker Shore Capital said: “Produce has announced an excellent set of preliminary results, in our view, with a significant increase in profitability with strong cash generation.”

Aim-quoted Produce – which counts the likes of Asda, Marks & Spencer, Sainsbury’s and Waitrose among its customers – said its pre-tax profits fell to £3.5m, from £7.3m a year earlier, after accounting for £4.6m of exceptional costs linked to the closure of its Kent packing site and the product recall at its Swancote Foods division.

Swancote Farms warned last year that there was a possible issue with traces of metal being found in one of its products, sparking a recall of a number of potato salad and ready meal ranges.

Armstrong said yesterday: “I am pleased to report that matters have been concluded and the net cost to the business for the un-insured elements of the claim have been finalised, resulting in an exceptional charge of £571,000. This is at the lower end of expectations that we indicated last year of between £300,000 and £1.5m.”

Produce proposed a 2.2 per cent rise in its final dividend to 4.88p, to be paid on 1 November. That will lift the total for the year from 7.165p to 7.32p.