January 28 2015 Latest news:
Wednesday, January 29, 2014
Turkey giant Bernard Matthews has vowed to battle back into the black after revealing a £20.3m loss over the last year.
The Norfolk-based company, which also has a major production site at Holton, near Halesworth, was hit by a double blow in the shape of high feed costs and demands from supermarkets to drive down prices.
The two issues contributed to the big loss in 2013, which compares with a £2m profit in 2012. Executive chairman David Joll said the big loss was “extremely disappointing”, but said the firm was on course for a brighter future.
He said: “If we can achieve a combination of cost reduction and improved brand performance, I am confident that we have a very successful and profitable future ahead of us.”
The business gained nationwide fame through its “bootiful” TV advertising campaign, fronted by founder Bernard Matthews, who died in 2010 at the age of 80.
It also hit the headlines in 2005, when TV chef Jamie Oliver criticised its Turkey Twizzlers, which were being served up at some schools for children’s lunches.
Mr Joll is focused on returning the business to profit, with the company trusting in the expertise of business turnaround specialist Rutland Partners, which ploughed £23.5m into the business in exchange for a substantial equity stake.
And it could come at a crucial time, as the latest study from the British Poultry Association (BPA) shows increased confidence from poultry providers that productivity is improving and costs are easing.
Customers got a taste of things to come last October when Bernard Matthews invested £1m in a brand relaunch to make its products more appealing to mums.
But the difficult decisions that have faced Mr Joll have been laid bare in the company’s latest set of accounts, which reveal the loss of 423 employees from across the group in the last year.
“2012-13 was undoubted a challenging period for the business brought about as a result of exceptionally high global wheat prices, which had a direct impact on our cost base,” Mr Joll said. “We weren’t alone in having to deal with these pressures as other companies across the meat and poultry sector suffered from the same issue.
“While the effects of the wheat pricing have eased slightly the food sector still remains a very challenging environment, with pressure from consumers to keep prices low, set against continually rising business costs at the other end. It is in this economic climate that we have to successfully ensure the future profitability of the business, and have a clear strategy in place to enable us to do this.
“The first part of this strategy was getting on board a new partner to help the business grow and bring much needed new capital into the company. In September 2013 we were delighted that Rutland Partners become a key shareholder, bringing with them enormous experience in helping well-known brands achieve their financial potential.
“The next stage for us, and something that we are currently working on, is ensuring the business is as efficient as possible and that we are creating products that consumers want to buy at a price that is right.
“Clearly our cost base was too high, something we are now addressing and we are focusing much more attention on the Bernard Matthews brand than was the case before I returned to the business.
“If we can achieve this combination of cost reduction and improved brand performance, I am confident that we have a very successful and profitable future ahead of us.”
Some may question if this is the start, or the end, of a painful restructuring process for Bernard Matthews, and whether the investment deal means it is no longer in control of its own destiny.
According to its accounts ending June 30 2013, published this month, total sales have edged higher, to £346.4m from £341.4m, but the group, which is based at Great Witchingham, recorded an £11.7m operating loss compared to a £5.3m operating profit last time.
The turkey giant has looked to drive down costs and restructure parts of the group.
It confirmed that the majority of the 423 jobs lost had come from the Hungarian arm SaGa Foods, after it closed its farming operations and a slaughterhouse to become a “standalone” processing business.
However, the Hungarian bank CIB Bank Zrt, which partly funded the operation through a loan facility, has demanded Bernard Matthews pay back about £7m within a year amid claims that it had broken the covenant of its agreement.
But the company expects to meet the demands after saving money from other parts of the business.