Uniq comes bottom of wealth creation efficiency league

Chilled convenience manufacturer Uniq has come bottom in a listing of UK food processors compiled by the Department of Trade and Industry (DTI), which rates companies’ wealth creation efficiency.

The DTI’s value-added scoreboard provides a measure of the wealth creation performance of UK companies compared with their European counterparts. It showed that while the UK had done well overall compared with other EU firms, the results for food and drink were mixed. While manufacturers with strong food and drink brands proved to be good creators of wealth, own-label food companies had struggled.

Wealth creation efficiency - so-called P2, is a measure of a company’s sales, less the costs of bought-in goods and services (value added) divided by employee and depreciation costs. It is expressed as a percentage.

Uniq had a P2 figure of just 93%, compared with star performers such as Unilever (176), Cadbury Schweppes (166) and Tate & Lyle (161). Norman Price (pictured), a senior industrialist with the DTI’s Business Finance and Investment Unit who helped compile the scoreboard, said: “If you are below 100% on the P2 scale, the odds are you are losing money.”

Other companies not doing particularly well in the value-added stakes included Grampian Country Food with a P2 of 108%; Northern Foods (110); Geest, now part of Bakkavor (116); Arla Foods (117); and Samworth Brothers (119).

Among the high performers in the list of 700 European companies measured, just four food companies with value added above £1bn had P2s of over 165%: Nestlé (173), Unilever (176), Danone (174) and Cadbury Schweppes (166).

Wittington Investments, the holding company behind ABF, which owns British Sugar, also came out well with a P2 of 158%. ABF has just announced plans to close its York and Allscott beet sugar factories after the end of the 2006/7 campaign and consolidate processing at its remaining four UK factories: Cantley and Wissington in Norfolk, Bury St Edmunds in Suffolk and Newark in Nottingham.

Premier Foods, which has just reported good sales growth on the back of rising demand for its Quorn meat replacement, has also put in a solid performance, with a P2 of 158. The UK operations of McCain Foods (171) and Heinz (172) also performed well.

Branded beverage producers such as Chivas (281), now owned by Pernod Ricard; Edrington (280), which produces Famous Grouse among other well-known whisky brands; and Diageo (273), topped the league. This is partly attributable to the capital intensive nature of their operations.

Meanwhile, the UK food retail sector also performed well, showing an 8% growth in value added over the past year compared with 5% for Europe overall. “That is quite significant in UK terms,” said Price. However, he said the figures “don’t imply a squeezing of suppliers’ margins”