Tunnock’s, the family firm behind Scotland’s well-known brand of tea cakes and caramel wafers, has seen a significant bounce back of profits despite the continued rise in costs of raw materials.
According to accounts filed at Companies House for the 52 weeks ended 24 February 2024, the manufacturer recorded a pre-tax profit of £4.1m, more than quadruple that of the previous term (FY23: £1m) but less than the £5.5m it hit in FY22.
Turnover was up by 15% to £87.1m, with gross profit margin rising from 25.4% to 26.7%. The leap in revenue was mainly down to rising prices, though, with volumes increasing by 5% to 629 million units.
Tunnock’s noted that its margins remained below the years prior to 2023 due to significant increases in raw material costs following the invasion of Ukraine and the more recent cocoa crisis.
The 134-year-old company called these cost increases ‘very challenging’ and said they were still impacting its financial performance after the year end.
It revealed it was continuing to take a long-term view through capital expenditure of £3.4m at its factory – located in Uddingston near Glasgow – to upgrade equipment during the period. This followed spending of £2m in FY23.
“This is essential to expand capacity and maintain our position at the forefront of the market,” stated the firm, adding that it “would continue to invest in plant, people, and products to expand the distribution of Tunnock’s products both in the UK and internationally”.
The 1950s was a remarkable decade of innovation for Tunnock’s, with the Caramel Wafer created in 1952 by Archie Tunnock (son of founder Thomas) as a product with a longer shelf life than cake.
Two years later, Archie and his sons Boyd and Tom used Italian meringue covered in chocolate and desiccated coconut to launch the Snowball, and then added the Caramel Log the following year. In 1956 Boyd used Italian meringue again, this time piped onto a biscuit base and covered in milk chocolate, to develop the now famous Tunnock’s Tea Cakes.
Sir Boyd Tunnock, who was knighted in the 2019 Queen’s Birthday Honours List for his services to business and charity, still runs the company to this day at the age of 91.
Branded sweet treats have also proved successful for UK manufacturer Premier Foods, which saw its Mr Kiplings and Cadbury Cakes ranges contribute to a 6.1% increase in revenue posted for the 26 weeks ended 28 September 2024.
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