Turnover for the company saw a slight increase from £1.4bn in the previous year to £1.42bn in 2022. However, cost of sales also increased in the reported period, up 3.7% to £1.37bn from £1.32bn.
Profit continued to rise year-on-year, with the company reporting a gross profit of £108.4m, up from £90.5bn, and approaching the £112.2m reported in its full-year accounts ended 1 August 2020.
However, the continued rise of costs meant it continued to hit the bottom line of the poultry processor. Distribution costs were up 3.7% to £103.6m from £99.9m, which contributed to an operating loss of £29.5m.
Costs of disposals
Despite reporting an operating loss for the period, this was still lower than the amount reported in the previous year (£44.85m). The manufacturer would have recorded a lower amount of loss for the year if not for the loss on sale of operations from is disposal of its two Bernard Matthews sites in Sunderland and Derby.
In its annual report, the poultry processor noted that performance of the business in the first half of the period was significantly impacted by inflation, particularly due to the timing and speed of the increases in costs.
“Performance in the second half of the period improved as these impacts were largely mitigated by a successful inflation recovery programme, which, alongside more stable operations, is why performance improved significantly year-on-year,” the report added.
Cutting loss making businesses
“The second half of the period also benefitted from the impact of a disposal of a loss-making part of the poultry operation in the Derby and Sunderland sites.”
Like many businesses in the UK, 2 Sisters was negatively impacted by the extreme weather affecting the country during the summer of 2022. This disrupted the company’s agricultural operation, due to the extreme heat.
“The company now seeks to deal with additional issues brought by climate change,” the report added. “Periods of extreme weather, especially heat, could result in significant disruption to our agricultural supply base.”
The number of staff working for the poultry processor fell during the reported period, with 7,467 working in products (down from 8,716 in the previous year) and 720 in administration and selling (a smaller drop from 762 in 2021), bring the total to 8,187.