Walkers Shortbread: reported a strong year of trading

Aberlour on Spey / UK. (wsb) Walkers Shortbread Limited has reported a strong year of trading, but warned price rises in raw materials would have a «significant effect» on the future of the business.

Accounts filed this days with Companies House reveal an eight percent rise in turnover to 86,3 million GBP in 2006 and a 633.000 GBP leap in pre-tax profit to 11,4 million GBP, buoyed by a strong performance in all sectors of the business. The figures come on the back of a 15 percent rise in turnover in 2005 – announces the «Scotsman».

But the company´s managing director, Jim Walker, said unprecedented cost increases in butter and flour would send profits plummeting in 2007. He warned profits were likely to dip in the current year and fall even further in 2008 as the traditional 109-year-old firm squared up to market pressures.

Walkers, which makes more than 50 shortbread, oatcake and biscuit-related products – 40 percent of which are exported around the globe – said it anticipated higher food prices are here to stay and were likely to be passed down to the consumer. It added that further pressure on the business came from the strength of the Pound against the Dollar and the Euro – with the USA and European Union two of the firm´s biggest export markets.

With butter making up 70 percent of the value of Walkers´ core product, shortbread, the price doubling has hit the company hard. But the company believes it is in a position to weather the downturn, with the impending opening of its new 60.000 square feet bakery in Elgin taking on the increased demands for seasonal goods.

Walker: «Our brand has performed very well, but there is a challenge which we have to face. It will be a difficult two to three years, but we are confident that once prices level out, we will be back on track. 2006 was a very strong year for us. We have invested a lot in the company in the last year, especially with the new Elgin factory».

He added there would not be any redundancies at the company, which boosted employee numbers to a record high of 1.338 this year, growing staffing costs to 21 million GBP, from 19 million GBP in the previous twelve months. Walker: «We are very busy and we have a pretty strong order book for the coming year».

He added markets for the luxury market such as the products Walkers makes for Duchy Originals was continuing to grow, as is the market for more healthy treats such as the line of WeightWatchers biscuits sold in supermarkets throughout the United Kingdom. Speyside-headquartered Walkers has a total of five factories in Elgin and Aberlour.

Walker: «We haven´t any further expansion plans at the moment. Surviving and remaining independent will be our biggest goal». He added that his brother, Joe, who owns a third of the business alongside Jim and their retired sister Margery, had three children who are also involved in the business. «We would like to keep it in the family», Walker said. In addition to the five factories in Scotland Walkers Shortbread Limited has a subsidiary in the United States – Walkers Shortbread Incorporated in Hauppauge, New York.