Carr’s boss voices concern over bread range cuts

By Rod Addy contact

- Last updated on GMT

The quality of the 2014 harvest was low
The quality of the 2014 harvest was low

Related tags: Food

Supermarkets pruning bread ranges will hit the wider bakery supply chain, according to Tim Davies, ceo of Carr’s Group, who said the situation was worrying.

Commenting on the release of Carr’s interim financial results, Davies said the current retail climate was one of his biggest concerns. “There’s quite a lot of turmoil, with some supermarkets going from three key brands down to two,”​ he told FoodManufacture.co.uk. “That’s bound to have some impact.”

Tesco confirmed last month it would delist Kingsmill bread from its stores, although supplier Allied Bakeries would continue to supply own-label lines, Allinson and Burgen bread, plus other Kingsmill products, it said.

Other casualties

According to Mintel, there could be other bakery casualties, as UK pre-packed bread sales fell 5.6% in the past year and many supermarkets are known to be simplifying ranges in all categories.

That said, Davies was still upbeat about the performance of the food division of Carr’s. “Last year was important because we saw a step-change in performance. We have been fine-tuning our operation and progress on the Kirkcaldy mill has been excellent.”

Investec analyst Nicola Mallard added: “In food, profits also advanced as volumes increased and the new mill continued to deliver operational benefits.”

Carr’s Group’s three flour mills delivered “an excellent performance during the period, building on last year’s momentum”​, it said. Flour sales volumes were higher than last year but, as a result of weaker commodity prices, revenue was lower.

The portside location of its two northern mills had allowed the company to source alternative supplies of high quality wheat, offsetting low protein levels from the 2014 domestic harvest, said Carr’s.

Volatility

The food division continued to concentrate on producing high quality flour to meet the increasing technical and food safety standards of customers, it said. It was looking to develop longer-term strategic relationships with our customers and a shared approach to risk management in a period of continued commodity market and exchange rate volatility, it added.

“A solid increase in 1H ​[first half] profits and a reiteration of confidence in meeting full year expectations should be well-received by the market, which has been nervous around agri company prospects,” Mallard concluded. “The group’s diversity and past investment has stood it in good stead to weather the current market conditions.”

In the 28 weeks to February 28, Carr’s, the agriculture, food and engineering group, reported pre-tax profit up 5.4%, from £10.1M in the same period last year to £10.6M. However, revenue fell by 2.8%, from £214.7M in the first half of 2014 to £208.6M.

“The strength of the group, with its international operations and diversity of business, has been demonstrated in the delivery of a record performance in the first six months,”​ said Davies in the interim trading statement. “This result has been achieved despite some challenging conditions in some of the markets within which we operate.

“Trading in the second half has started well and we remain on track to meet the board’s expectations for the full year.”

Related topics: Bakery, Cereals and bakery preparations

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