2 Sisters reveals profit hit from West Bromwich factory hygiene shutdown
The 2 Sisters food group has revealed a near-£5 million hit to profits from the shutdown at its West Bromwich plant in October.
The month long closure of the Dial Lane chicken processing factory was the primary driver to a £4.9 million drop in operating profit at 2 Sister's protein division.
Newly released figures for the first quarter of the company's financial year show protein division operating profit was down to £1.2m, although like-for-like sales were up 3.7 per cent at £578.8m.
The food hygiene scandal at the West Bromwich plant saw it shut down for more than a month and company owner Ranjit Boparan had to answer questions from a parliamentary committee.
The factory re-opened at the beginning of November after retraining of its 850-strong workforce, with added oversight including full-time food inspectors at all 2 Sisters' plants.
The firm 2 Sisters says there will be increased oversight of the 850-strong workforce, which has been undergoing retraining in the wake of revelations over hygiene breaches at the Dial Lane site, which made national headlines.
Customers including Tesco, Marks & Spencer and Aldi are taking products from the factory again, but the group saw pre-tax profits fall more than £10m in the three month period, down to £8.4m, blamed on inflation and the disruption at West Bromwich, known with the company as Site D. Despite this and a tough market backdrop total group sales were up 3.8 per cent to £849m.
Chief executive Ranjit Boparan - the group's billionaire founder and dubbed the 'Black Country chicken king', said: “Despite the tough market environment, we have grown revenues during the first quarter and have worked hard to deliver for customers.
“As well as commodity inflation, our results have also been affected by the temporary suspension of operations at our poultry cutting plant (Site D). We are taking action now to improve margin performance and we should see the results of this coming through in the second half of the year, as we work through our plans to strengthen our business in all areas."
Looking ahead, the company said:"Despite progress with price recovery and efficiency programmes, higher commodity prices and continued disruption following the suspension of production at Site D are proving difficult to mitigate in the short term.
"However, we remain cautiously optimistic that our change programme, coupled with a degree of softening in commodity prices will improve our position as we head into the second half of the year.
"We re-emphasise our position that our core businesses operate in attractive, growing markets and our broad reach means we can benefit from operational and commercial efficiencies. Our commitment to producing safe and quality food remains at the heart of the business, as does our determination to deliver a stronger overall position as the financial year progresses."
Two Sisters also has a factory in Wolverhampton but closed its site in Bevan Way, Smethwick, this summer with the loss of around 300 jobs. Another 290 were redeployed to other sites.
The £3bn company owns a number of food brands including Goodfella’s Pizza and Fox’s Biscuits and employs around 23,000 people in the UK and Europe.
