Poultry, ready meals and biscuits group 2 Sisters, which earlier this month confirmed plans to close a roast chicken factory near Stowmarket with the loss of more than 600 jobs, today reported an annual loss after continuing to feel the squeeze from the horsemeat scandal.

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The company said profits had also been eroded by its purchase of loss-making chicken, beef and lamb operations from Dutch food group VION, which included sites at Eye in Suffolk and Witham in Essex, as well as currency swings and higher ingredient prices.

Birmingham-based 2 Sisters, owned by entrepreneur Ranjit Singh Boparan, reported losses of £33.5million in the year to the end of July after exceptional items, interest and tax. That compared with profits of £42.5m a year earlier.

Like-for-like sales grew 5.6% to £2.4billion. Including acquisitions, total sales surged 23.3% to £2.9bn, as the group consolidated its position as one of Britain’s biggest food producers.

2 Sisters has been on a debt-fuelled growth spurt since buying Yorkshire-based Goodfella’s pizza and Fox’s biscuit maker Northern Foods for £342m in 2011.

But it said the market saw ready meal sales plunge by as much as 40% when the horsemeat scandal emerged early this year, after traces of horse DNA were found in frozen beefburgers sold in Tesco, Iceland, Aldi and Lidl.

That hurt sales in its chilled food division, which makes ready meals for chains including Marks & Spencer, even though no traces of horsemeat were found in its products.

2 Sisters warned that harsh conditions are set to continue as the ready meals market recovers slowly and household budgets remain under pressure.

It continues to close plants to slash costs, and shut a factory in Leicester in June and earlier this month announced the closure of the roast chicken site at Haughley Park, with 750 jobs going in total.

Mr Boparan said: “Trading conditions have been very tough with inflation impacting cash-squeezed consumers and the impact of the horsemeat scandal on the food sector.

“We expect the economic environment to remain tough and we will work with our customers to deliver quality and value to consumers, invest in our brands, in innovation and our people, and improve efficiency.”

The group is launching about 100 new traditional meals, ranging from roast beef to chilli con carne, to rebuild the ready meals sector.

And it said it aims to return the Vion business, which earned sales of £365m under its 20 weeks of ownership, to profit next year.

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