Contract loss and Brexit send Young’s profits tumbling
PRE-TAX PROFIT at Young’s Seafood plummeted by 95 per cent last year following the loss of a key salmon processing contract with Sainsbury’s.
The figure tumbled from £15.2m to £718,000 in the year to September 30, 2016, while turnover fell to £496m from £587m.
Earnings before interest, tax, depreciation and amortisation fell by 43 per cent from £37.4m to £21.2m.
As well as the loss of the contract, the Grimsby-based fish and seafood processor was also hit by a weak pound following last year’s Brexit vote, putting pressure on margins.
A spokeswoman said: “This is the first full financial year results that reflect the full impact of the loss of the significant Sainsbury’s chilled contract in 2015. During the year we took mitigating actions to address this.
“We restructured our manufacturing and overhead costs ahead of plan following the challenges of 2015.
“The results reflect solid performance, strong cost control, with EBITDA delivery in line with plan in a challenging trading environment.”
Bill Showalter, chief executive of Young’s, said the frozen food business performed particularly strongly during the period.
“Young’s Seafood is the leading UK fish and seafood processor, inspiring people to love fish now and for generations to come,” he said.
“Our brand remains the clear number one in both chilled and frozen market products, across multiple channels and temperature formats.
“We have worked proactively and collaboratively with our retailer partners to take mitigating activities to address exceptional Brexit driven foreign exchange and raw material inflation.
“Our frozen business performed strongly during the period, with 5.3 per cent top-line growth. Young’s master-brand relaunch continued to drive brand growth ahead of our competitors, with our Gastro range now established as a £60m brand.”
Mr Showalter highlighted its multi-million pound TV and radio advertising campaign, which has boosted its Gastro brand.
Young’s has also made significant moves to drive growth in its international business, through exports, and its foodservice business.
In 2016 it launched a number of new products, including Simply Bake. It is set to announce more new product launches for 2017.