Rising production costs hit Simon Howie Butchers’ profits

By Noli Dinkovski contact

- Last updated on GMT

Simon Howie provides meat products to most major supermarket chains
Simon Howie provides meat products to most major supermarket chains
An increase in production costs has led to a “challenging year” for Scottish company Simon Howie Butchers.

In financial reports filed last week, the business reported a drop in operating profit from £2.67m to £1.78m for the year ending 31 December. Its turnover did increase 2.6% year-on-year.

As well as having shops in Perth and Auchterarder, the business provides meat products to most major supermarket chains, as well as Scottish hotels and restaurants.

Director Simon Howie said the business had been hit by rising costs across the board but felt the financial position was healthy.

‘Raw material increases’

“Sales growth was achieved, but raw material increases began to soak up the new contribution – the steady increase in labour costs, coupled with packaging and utility cost hikes, making the running of the business as challenging as ever.”

He did add that these were “risks for the food industry generally”.

During the year, the business invested £3m in new packaging and food processing equipment, as well as a 3,700m2​ new building.

Howie said this investment was necessary to maintain its market position. “Our competitors continue to challenge us and, as such, we realise the need for constant improvement.

‘The company is profitable’

“These results reflect that the company is profitable and is retaining profits to invest in operational improvements to maintain margins. Turnover increases with the marketing of new products.”

Marks & Spencer also recently reported the impact of rising production costs​, with pre-tax profits dropping 62.1% over the 52 weeks to 31 March.

Rising production costs have been heavily felt in the meat industry particularly, with British Meat Processors Association chief executive Nick Allen reporting that its members have seen costs rise of late, hitting margins.

Related topics: Business News, Supply Chain, Meat & poultry

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