Thorntons claims record production levels

By Rod Addy

- Last updated on GMT

Related tags Better Customer service

Boosting production volumes had secured employment at Thorntons’ Alfreton factory, said Paul Wilkinson
Boosting production volumes had secured employment at Thorntons’ Alfreton factory, said Paul Wilkinson
Thorntons has hailed record production levels in its full-year results, securing permanent jobs for many of its factory workers.

Paul Wilkinson, chairman of the UK chocolate maker and retailer, said manufacturing operations had reached new heights. “As a result of growing production volumes we have secured employment at our factory in Alfreton, Derbyshire.

“We play an important role in the local economy and are proud when others declare our manufacturing efficiency and quality as world class.”

Chief executive Jonathan Hart said output had grown 4% to record levels. “This growth has been achieved while controlling our cost base, retaining excellent customer service levels and substantially improving product quality performance.

‘Third robotic packing line’

“Targeted investment to maintain the infrastructure, improve our capacity and drive efficiencies continues with the addition of a third robotic packing line which will be operational prior to our peak 2013 Christmas period.”

Hart said the company’s buying strategy for direct and indirect materials was enhancing productivity, capacity and risk mitigation.

“As we have expanded our manufacturing output we have been able to reward loyal skilled temporary employees with permanent contracts and are now one of the most significant industrial employers in the local community.”

The company claimed sales increases for its newly created fast moving consumer goods division (formerly sales and operations), UK commercial, international and own-label sections.

Seasonal, gifting products

Hart predicted continued growth in seasonal products sold around the Easter and Christmas periods and in business through convenience and independent stores. Sales through the major grocers would benefit from further work on gifting products, for example, for birthdays, he said.

The supermarket channel “will become the largest by the end of the 2013 financial year” ​and sales growth there would remain strong for at least the next three years, he added.

However, Thorntons said like-for-like own-store sales were down as a result of 35 store closures across the year and franchise sales were dented by the administration of a major franchisee partner in May 2012.

In addition, Thorntons Direct online sales fell 10% as a result of “significant issues with the development and late deployment” ​of the company’s new website, launched in September 2012, Hart said.

Neil Saunders, md of research and consultancy outfit Conlumino, said this was an area of concern, especially because overall web sales in the category were doing well.

‘Disappointing outcome’

“Given that online sales of chocolate and confectionery are growing strongly, this was a disappointing outcome and is something that the company will need to remedy if it is to take future advantage of this lucrative channel.”

He told it was a little worrying Thorntons had given no indication of improvements in the area since problems with the website had been ironed out.

The firm boasted pre-tax profit of £5.6M for the 52 weeks to June 29, up from the previous year’s £0.9M, on revenue up 1.8% from £217.1M to £221.1M.

The performance led Investec analyst Nicola Mallard to upgrade pre-tax profit forecasts for the coming year. “Year-on-year growth in PBT ​[profit before tax] was significant; the strategy is clearly delivering as the group rebalances sales, revitalises the brand and restores profitability.”

Net debt reduction in 2012-2013 was also better than expected, she said.

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