Boparan Holdings: First Half 2015 Results

Birmingham / UK. (2sfg) Boparan Holdings Limited, the Parent company for 2 Sisters Food Group, a leading diversified Food manufacturer with strong positions in Protein, Chilled and Branded categories, announced its second quarter consolidated results for the 13 weeks ended 31 January 2015.

Q2/2015 Operational Highlights

• Overall adjusting for the affect on the business of one off items, performance stabilised and was in line with guidance given at our Q1 announcement:
  • Price deflation continues and volumes are generally lower
  • Against this background, LFL sales broadly flat at 807.3 million GBP
  • Adjusted operating profit flat at 13.1 million GBP (Q2/2014: 13.3 million GBP)
  • One off and exceptional items of 20.7 million GBP (Q2/2014 exceptional items: 26.3 million GBP)
  • Retained loss after tax was 16.7 million GBP, compared to a loss of 27.4 million GBP last year
• Price deflation and other challenges contributed to a 3.6 million GBP reduction in adjusted operating profit in our Protein division.
• Chilled LFL sales were up 2.9 plus with another quarter-on-quarter improvement in operating profit.
• Branded achieved a modest operating profit in the quarter and LFL sales were broadly similar to the same period last year.
• Ebitda for the quarter was 15.1 million GBP (Adjusted Ebitda was 32.5 million GBP; Q2/2014: 36.1 million GBP).
• Working capital continues to be tightly managed with net cash balances of 127.5 million GBP.
• The business has an RCF of 60 million GBP that remains undrawn at the quarter end.

Ranjit Singh, CEO of 2 Sisters Food Group, said: «This has been another challenging quarter for the Group. Against this tough backdrop, yet again we have delivered for our customers over the key Christmas trading period. Given the hurdles we are currently facing, we have delivered a creditable performance and are stabilising the business».

«In our Protein business, I take great pride in our continued industry-leading investment in the fight against campylobacter, but the market remains very tough. In addition, we have had to deal with the fall-out of Avian Influenza outbreaks, as well as further negative sentiment from consumers around the release of the FSA´s campylobacter figures for retailers».

«However, we continue to integrate the division following the Vion acquisition and we are taking action to deliver efficiency and output improvements across our sites».

«A year ago, our Chilled division´s profitability was impacted by the aftermath of horsegate. I am pleased to report that a year on, we are making steady progress, with like-for-like sales up 2.9 plus and another quarter-on-quarter improvement in operating profit».

«Our Branded Products continue to operate in aggressive markets and continue to see pressures on sales mix and promotions. Branded achieved a modest operating profit in the quarter and LFL sales were similar to the same period last year. We continue to invest in quality and marketing at Fox´s biscuits».

«This is the toughest commercial environment I can recall for many years with substantial changes at many of our larger customers. We expect conditions to remain difficult, but are firmly focused on delivering quality and value to all our customers».

Outlook

The tough trading conditions for food manufacturers and our retail customers look set to continue. External factors have adversely impacted our poultry division´s performance, and we are working hard internally to mitigate this and improve our efficiency and effectiveness at all our UK poultry sites. We expect Group profitability in Q3/2015 to continue to be negatively affected by the effects of AI, as international boundaries remain closed to our products. Despite the prevailing conditions, we are seeing improved performance across parts of the Group, such as in our Chilled division, and we will continue to address our challenges to improve margin by addressing our cost base and improving the operational effectiveness of our manufacturing sites. We will continue to put our customers at the heart of what we do and through consistently delivering quality, service and value, we are strongly positioned for the future.