Moy Park's profits plunge by over 70pc despite sales boost
Published 19/03/2016 | 02:30
Pre-tax profits at poultry giant Moy Park are down by over 70pc to £9.4m (€12m) despite an increase in sales.
According to its results for the year to January 2, the poultry-processing company, which has operations on both sides of the border and is Northern Ireland's largest private sector employer, saw its pre-tax profit drop from £32.3m in 2014 to £9.4m last year.
However, over the same period, the firm's full-year figures showed a 1.4pc increase in turnover to £1.44m.
In its annual statement, the firm put its increased expenditure down to "exceptional items".
It was explained that the "exceptional items" included the cost of preparing to float the company on the stock exchange.
However, the plan was ultimately abandoned and the company was instead bought over by JBS in September. The takeover was Northern Ireland's largest ever food company deal, costing the buyers £988m.
As part of the company's restructuring, production of the firm's cooked chicken ranges which had been carried out at the Wisbech site in Cambridgeshire was moved to Moy Park's Grantham site in Lincolnshire. The costs incurred closing the site were also included under "exceptional items".
The results also showed that underlying pre-tax profit, which excludes exceptional items, bond interest and foreign exchange changes on inter-company loans, was also up by 2pc to £45.5m.
Over the same time, the company's sales volume grew by almost 7pc and for the first time the company processed over five million chickens a week.
"The strong performance was delivered against the backdrop of a highly competitive market, foreign exchange headwinds, commodity price deflation and export restrictions," said chief executive Janet McCollum.
Also accounted for in the results was a £27.5m investment in its facilities in Dungannon, Craigavon and Ashbourne in England. Also included was £30m allocated invested in the firm's farming partners.
Moy Park remains Northern Ireland's biggest employer, with 6,300 employees in the North, and another 5,400 in Britain.
The firm also recently announced it would invest in its "ready-to-eat" and "fresh poultry" lines.
Ms McCollum recently said the company was in favour of the UK remaining in the EU, saying "Europe was [Moy Park's] market". The firm also has operations in the Republic, England, the Netherlands and France.
"Within the EU, UK companies have open access to 500 million consumers and, in the event of a Brexit, no one has been able to guarantee our continued access to those markets," she said.
"The EU has imperfections but it is a massive market which offers export security and the UK needs to remain within it."
Economist John Simpson said the fall in Moy Park's revenue was a "little bit worrying".
"They have managed to increase the volume of their sales by more than 6pc but their revenue has gone up by less than 2pc. It shows that they are relying more and more on the large volume market, working on the large volume commodity market rather than on trading on increased margins."
"The second, more significant, concern is that even with all of the adjustments made, a £1.7m loss was recorded in the last quarter of 2015," he said.