The manufacturer of prepared potato products had been operating at a loss for the past three reported financial years following a metal contamination incident in May 2015, which cost the company nearly £600,000.
Continued losses for the processor resulted in a £2m charge in impaired fixed assets being levelled on the facility by the board of directors.
A statement from parent company Produce Investments said: “Despite the best efforts of management and employees to improve the company’s fortunes, the business’ financial performance remains unsustainable.”
The fortunes of Swancote Foods have marred an otherwise positive financial record for Produce Investments and its subsidiary Greenvale AP – the company’s trading body and direct owner of Swancote.
In its full-year financial results for the 12 months ended 30 June 2018, Greenvale reported an operating profit of £1.6m – up from £0.77m in the previous year. This was in spite of a slight dip in sales to £145.6m from £156.5m, thanks to an exceptionally large potato harvest in 2017 that created a deflationary market.
Supply contract loss
Meanwhile, in October last year, Produce Investments lost a major contract to supply potatoes, which was expected to wind down by the end of this month.
The unnamed customer informed the producer of its plans to implement a single supplier strategy. Produce Investments expected that the supply volumes to its customer would be gradually phased out over a three-year period from the expiration of the existing agreement.
It is unknown at this time what sort of financial impact the loss of the supply contract would have on Produce Investments.