In its annual report for the year ended December 26, 2015, which was filed at Companies House recently, it revealed that it had reduced debt from £65.5M to £52.8M.
Turnover was down £70M to £458M, reflecting the impact of declining pig prices and the “pass through” of that decline to customers. Pre-tax profits were £12.5M up from a loss of £12.2M in the previous year.
This was the third year that Karro Food Group had operated as an independent business, following the acquisition by Endless, the private equity house.
A major investment programme had taken place, dedicated to lowering production costs and increasing product quality.
This included a Wiltshire cure facility and a new innovation centre in Malden; new sliced cooked meat packing lines at Haverhill and a new chilling capacity in Cookstown providing “significant capacity and leading quality improvements”.
The group also said it had made “significant modernisation” of slicing and packing lines in bacon, gammon, fresh pork and sliced meats.
Mitigate these risks
Karro Food Group said that there were still risks to the business but the board had “strategies to manage and mitigate these risks”.
It highlighted the changing commodity prices of feed, pig prices and general European meat prices as factors affecting the profitability of the business.
It also said that it had reduced concentration in its business and was increasingly relying on long-term strategic partnerships to provide stability.
Michael Kestermont, chief financial officer, said: “Karro Group is confident that 2016 will bring further improvement in the profitability of the business through revenue growth and further operational efficiencies driven by investment and management initiatives.”
He also said that the group was confident that the growth would be sustainable. It was driven by “significant long-term and strategic partnership agreements” with a number of customers.
Kestermont described the manufacturer as moving “from a company in turnaround, to a strong, dynamic and well-respected player that is building further strong relationships in the UK and globally and investing heavily to ensure all its production facilities are best in class”.
Meanwhile, at the beginning of this year, the manufacturer revealed a £2M investment plan at its Scunthorpe site. The investment, which was expected to create 140 new jobs, was to meet a predicted rise in retail sales, according to the business.
Karro Food Group results – at a glance
- Turnover: £458M
- Pre-tax profits: £12.5M
- Debt cut from £65.5M to £52.8M