Fresca Group loss driven by costly investment and reorganisation

By Rod Addy

- Last updated on GMT

Fresca Group's Thanet Earth business delivered a weak performance across the past financial year
Fresca Group's Thanet Earth business delivered a weak performance across the past financial year

Related tags Fresh produce Finance

Investment and reorganisation for future growth demolished pre-tax profit in the year to 24 April at fresh produce supplier Fresca Group, which owns Thanet Earth, The Fresh Produce Centre and DGM Growers.

In its annual report filed with Companies House, Fresca Group stated that the £5.6m pre-tax profit it recorded in the previous financial year had dropped to a £29,000 loss. However, while operating profit was also down £5m on the previous year, it had still remained in the black, standing at £1.1m. And sales rose by £10m, from £444.5m to £454.1m.

In his opening statement in the report, chairman Chris Mack also put the situation in the context of the business's development: "Although it is disappointing to report a pre-tax loss, this is largely the result of decisions the board has made with the aim of positioning the business for future success. Much of the business performed well although offset, to some degree by a weak performance at Thanet Earth and the cost of transitioning The Fresh Produce Centre to a model fit for the future."

The business faced costs involved in restructuring The Fresh Produce Centre at its Paddock Wood site, rationalising its banana ripening facilities and increased recruitment and IT costs.

Primafruit Evesham

Fresca Group also invested £6m of capital expenditure in its Evesham Primafruit facilities, which included improved banana ripening, packing and storage and its DGM Growers Holbeach site - focused on specialist vegetable production - during the financial year. It stated: "The Fresh Produce Centre at Paddock Wood saw further losses of its traditional fruit importing activity as the industry continues to consolidate.

"In recognition of the challenges faced by the businesses, we appointed Fresca's operations director Tim Espley into the role of managing director of The Fresh Produce Centre. During the year Tim provided critical leadership which helped improve performance as well as delivering a comprehensive review and the implementation of a new low-cost operating model."

DGM growers is the UK's only commercial producer of chicory. Fresca Group stated: "In the year the business further expanded its field growing operations alongside a £5.4m site investment (£4.3m in the current year) realising a long-held ambition to upgrade the site with a purpose-built chicory production facility, packing factory, additional cold storage capacity and much improved staff offices and welfare areas." The site had also invested in automation and increased efficiency.

Mack commented: "We now have excellent facilities at DGM Growers and have some exciting plans around developing further hi-tech growing of speciality vegetable products."

M&W Mack wholesale operations

Fresca Group stated its M&W Mack wholesale operations in Southampton had been hit when business following a recently acquired cruise ship contract had dried up as that sector was hit by the pandemic. As a result, it had pivoted to offering fresh produce boxes for new delivery schemes and increased its customer base.

"The coronavirus pandemic has demonstrated the relative robustness of the fresh produce industry,"​ commented Mack. "The initial challenge for our business was procuring and processing sufficient volumes of fresh produce to meet such higher demand than normal, whilst striving to ensure that our people were as safe as possible. I must acknowledge and than everyone in the business for their efforts. Although demand has returned to more normal levels, we are continuing to increase our vigilance and take additional precautions to minimise transmission risks associated with this disease."

Mack thanked group chief executive Ian Craig, who moved on in August for his work with the business, and welcomed Martyn Fletcher as Craig's replacement.

In its strategic report, Fresca Group paid tribute to its own staff working through such a disrupted period and the growers that continued to supply it. "Our industry has always been subject to rapid market changes, but no one could have predicted how rapidly and comprehensively we would need to adapt to manage the impact of coronavirus on our business. When much of the UK closed for business, we had to ask our people to step up to face increased volumes and to operate in news ways."

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