Profits at Ginsters and West Cornwall Pasty Co owner Samworth Brothers have fallen as a result of rising commodity costs and £18m in one-off charges.
Describing the year to 29 December 2018 as ‘challenging’, the business recorded a 1.6% year on year dip in sales to £1,004m.
Profit before tax was £0.8m, down from £23.5m the previous year. The profit included non-recurring costs of £18.2m, and Samworth said profit for the year would have been £19m without these.
The non-recurring costs included £1.2m additional pension liability, £4m relating to software costs, a and a £10.1m impairment following “significant” operating losses at desserts and cakes division Kensey Foods.
In January this year, Samworth announced plans to close Kensey Foods, which operated from an 11-acre site in Launceston, Cornwall.
Profit margins dropped from 17.8% to 17.1%, which the business said was a result of increased raw material costs and a change to product mix.
In accounts filed at Companies House, Samworth said it was in a transitional period as it looked to return to profitable growth.
It added it was “well placed to exploit the high-growth” food-to-go market following the acquisition of the Manton Wood sandwich business from 2 Sisters Food Group.
“The food sector remains highly competitive as consumer eating habits continue to evolve,” stated Samworth. “This has resulted in reduction in sales volumes across a number of core categories but has created opportunities in others, particularly the convenience and food-to-go categories.”
“While market conditions continue to be testing, the business is now performing better in terms of sales, profit and cash generation and we remain confident about the future," the business told British Baker.