Bolton / UK. (wbl) Family baking firm Warburtons Limited has seen a dip in profits due to the rising cost of wheat. The bakery based in Bolton (UK) saw a strong increase in sales last year as it completed its transformation from a regional player into a national bread maker.
Supermarkets across the country, especially the South and South-east, began stocking its bread following a concerted effort by the company to expand. But according to the latest accounts filed at Companies House, pre-tax profits fell from 49,1 million GBP to 43,4 million GBP, despite a 16 percent sales increase to 209 million GBP. The firm´s raw materials bill, which is mostly made up of flour, has risen by 13,8 million GBP as the price of wheat has escalated.
Chairman Jonathan Warburton: «Towards the end of the financial year, we achieved full national listings with a major retailer for the first time in our history – a real milestone for the business, which we will now look to build on. We were able to expand the distribution capability of the business through the commissioning of two new bakeries, one in the North-east and another in South Wales, and this has been the key to supporting our sales growth. Looking ahead, we continue to see further opportunities for growth and have recently commissioned a second bread plant at our North London bakery. We are not currently planning a price increase but we are keeping a watching brief on the volatile wheat market. The results of the July and August harvest will be critical».
The price of wheat is at its highest for ten years as a severe drought in Australia and flooding in the UK has coincided with a US government policy to divert a large percentage of its wheat into the manufacture of biofuels. The price for a bushel of wheat – a measurement of eight Imperial gallons – has risen from 197 GBP a year ago to an estimated 304 GBP this winter.
The lack of supply and higher demand has driven up prices. Many UK food manufacturers will have to cope with the fallout from this year´s floods, which has wiped out much of Britain´s crops. Economists have already warned that this lack of supply will cause many food staples to rise in price.