The 2 Sisters Food Group has struggled to improve the financial health of its balance sheet in the first quarter (Q1) of this fiscal year. It has seen a weak profit performance threaten strong sales growth.
The company reported an 8.7 per cent like-for-like sales increase for the 13 weeks leading to October 26th this year. Although the 2 Sisters Food Group had powerful gains in its protein division, operating profit before exceptional items fell by £4 million.
While like-for-like profits saw a modest increase, the company’s net debt rose and it has recorded a loss of £12.1 million during the quarter - which is up from £5.1 million in the same three months in 2013.
The company claims that its branded operations was continuing to bounce back from the losses it had suffered, but they still experienced a decrease of 3.8 per cent as a result of lower promotions and the reorganisation of its sales mix in biscuits.
Furthermore, the 2 Sisters Food Group’s net debt figure increased by £18.4 million making the company’s total arrears £561 million.
In its report, the company highlighted that it had managed to reduce its full-year net debt by £5.7 million and it had boosted net cash flow from operating activities, from £2.1 million in the Q1 of 2012 to £27 million.
Although branded sales dipped in Q1, 2 Sisters claims branded operating profit was continuing to improve and was being driven by new product launches and by getting rid of uneconomic own-label lines.
Ranjit Singh, chief executive officer of 2 Sisters Food Group, said: “We have made a solid start to our new financial year, in challenging and competitive market conditions as inflation continues to squeeze consumers spend. We delivered good like for like sales growth delivering food for every meal occasion.
“Our strategy remains in working with our customers to drive organic growth aligned with utilising our experience of turning around acquired businesses and integrating them into our wider Group to bring about long-term growth benefits.”