Ice cream maker Hill Station has significantly improved operational efficiency at its Cwmbran plant in recent months following a review of its manufacturing processes and planning and purchasing strategies.
Group finance director Robert Alstead told Food Manufacture: “We have managed to reduce our direct labour costs as a percentage of turnover by 21% in the last year, energy costs by 17% and distribution costs by 29%, thanks to better scheduling and planning and focus from the new management team.”
Chief executive Cliff Carter added: “All the key indicators are showing substantial improvements with direct labour, waste levels, distribution costs and energy consumption showing positive trends.”
The firm, which posted a pre-tax loss of £5.4M on sales down 34% to £9.1M in the year to October 31, 2007, said overheads were “significantly lower than last year”, while substantial progress had also been made in the recovery of raw material prices.
However, the year-end loss was greater than expected due to continuing raw material price rises, bad weather and “initial resistance from customers to accept price increases”, it admitted.
A recovery plan spearheaded by Carter “shows the company being EBITDA (earnings before interest, taxes, depreciation and amortisation) positive by the end of the 2007/2008 trading year”.
Although the trading environment remained tough, Hill Station had secured new business in recent weeks, said the firm. “From the beginning of April all of the identified new business objectives have been secured. This new business has been secured with large retail and wholesale customers and will add significantly to the company’s turnover this year.”
The firm was now in advanced discussions with shareholders and other potential invoice discount providers with a view to obtaining alternative financing after bankers capped its invoice discount facility at £1.1M.
“Given our working capital requirements, focus on tight working capital management has been and remains vital. The company is making good progress in improving cash collection from debtors.”