Group turnover increased in 2019 by 1.19% to £747.3m, thanks to a strong performance by BerryWorld Group and a growing demand for soft fruit, according to a financial report just posted by Companies House. However, operating profit fell from £4.9m to £3.8m, albeit much of that induced by losses from discontinued operations.
A poor British summer – compounded by start-up losses at its US joint venture Mastronardi BerryWorld America – meant group adjusted earnings before interest, tax, depreciation and amortisation decreased to £12.7m (from £16.3m).
Argent acknowledged last year’s results did not account for the ongoing effects of the coronavirus outbreak, but it was quick to address the impact the global pandemic would have on financials in 2020. Despite the strength of its fresh fruit and non-foodservice operations, two businesses had been particularly adversely impacted, it said.
Closure of the hospitality industry
Fairfax Meadow principally supplies customers in the hospitality and leisure industries, the majority of which are currently closed due to the outbreak and/or earning zero revenue.
PrepWorld UK’s fortunes were more favourable. However, that business had still suffered thanks to its food-to-go proposition experiencing a significant downturn in demand in conjunction to the vast quantity of consumers either furloughed or working from home.
To this end, the two operations had responded to the crisis with a series of measures to help their businesses weather the negative impact of the pandemic (see box below). This included furloughing more than 500 employees where no work was available for them, cuts in management pay and seeking alternative channels to market.
“We believe that these swift actions will preserve the Fairfax Meadow and PrepWorld UK businesses in the best possible health while the conditions in their marketplace remain suppressed,” the report added. “This will allow for a return to profit ability once these markets recover.”
Argent Foods’ steps to combat pandemic’s economic impact
- Temporarily closing some productive capacity while remaining open for business to safely supply a high-quality product to those customers who continue to need it
- Seeking alternative channels to market, such as direct to consumers and home delivery
- Cutting back discretionary expenditure wherever possible
- Obtaining rent reductions from landlords in respect of closed and downsized productive capacity
- Furloughing in excess of 500 employees where no work is available to them
- Cuts in management pay
- Careful control of stock and working capital balances
“The COVID-19 outbreak and resulting necessary measures taken by various governments to contain the virus have already affected all of our businesses, albeit some more significantly than others,” said the report.
Panic buying and lockdown
“While this is a non-adjusting event for the purposes of the 2019 year-end financial statements, consumption patterns were disrupted by the inevitable ‘panic buying’ that followed the announcement of lockdowns in major markets in the UK. The diversity of the group’s geographical and market spread provided some counterbalance to these effects.”
Argent Foods predicted its revenue and profitability for the year ended December 2020 would depend greatly on the measures taken by the governments in the regions it operates in to contain the virus.
“As a diverse group of food suppliers we are fortunate that most of the individual businesses within the group have been less severely impacted by COVID-19 than many businesses,” the report added “Nevertheless, we are not immune to the far reaching impacts of the global economic downturn we are currently experiencing.”
In addition to BerryWorld, PrepWorld UK and Fairfax Meadow, Argent Foods' businesses include fresh produce firm The Poupart Group; mechanically deboned poultry processor Belwood Foods; and own-label and branded meat supplier Tendercut.