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Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its second quarter (Q2) results for the 13 weeks ended 26 January 2013.

Q2 2012/13 Financial highlights

 Q2 2013Q2 2012Q2 2013 vs Q2 2012
Total sales £626.5m £571.8m +9.6%
LFL sales* £597.4m £566.7m +5.4%
Operating profit** before exceptional items £26.1m £25.7m + £0.4m
Net debt*** £524.5m £630.8m - £106.3m
Net Debt: EBITDA 2.7 3.6 Reduced by 0.9

*Like for like (LFL) sales are based on the 13 weeks ended 26 January 2013 compared to the 13 weeks ended 28 January 2012. LFL excludes discontinued operations, the acquisition of Brookes Avana which was completed on 30 December 2011 and the impact of exchange translation.
** Operating profit is after loss/profit on Joint Venture
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £174.3m (Q2 2012: cash balances of £67.2m). 

Q2 2012/13 Operational highlights

  • Q2 like for like (LFL) sales up 5.4% in a tough and competitive market
    • Christmas business solid but driven by higher promotional activity
    • Solid performance in Chilled; challenging outlook in second half
    • Branded remains tough; Frozen recovery offset by Biscuits
    • Poultry feed price inflation recovered on plan; inflation remains challenging
  • Acquisition of VION Poultry and Red Meat businesses completed on 8th March 2013; good strategic fit to increase capacity and secure British supply; further diversifies our meal occasions
  • Continued progress in deleveraging; Net Debt:EBITDA at 2.7x with cash balances of £174.3m

Ranjit Singh, CEO of 2 Sisters Food Group, said: “We delivered a solid performance in Q2, despite the tough and competitive market conditions. Every one of our 18,000 colleagues helped to ensure our seasonal Christmas business – which served meal occasions including ready meal accompaniments, festive sandwiches, Christmas biscuits and Christmas puddings – delivered on plan for our customers.

“We made good progress to complete our phased recovery of higher feed costs by the end of Q2, but forward feed prices remain volatile. Looking forward, we also expect considerable volume reduction in our ready meals business during the second half year following media coverage of horsemeat issues, which have impacted the food industry as a whole and beef related ready meals in particular. As a result, we remain cautious on the outlook, with continued inflation and competitive trading conditions in a tough economic environment, alongside the dilutive effect of our VION acquisition. We will need to invest with our customers to maintain sales growth for the remainder of our financial year.”

Q2 2012/13

Our focus on the customer saw Group like for like (LFL) sales (adjusted to exclude Brookes Avana sales) increase by 5.4% for Q2 2012/13.

Q2 Group operating profit, before restructuring costs, was £27.3m (Q2 2011/12 operating profit: £25.6m) and after an exchange loss of £13.4m (Q2 2011/12: gain of £11.8m) on restating the euro element of the bond, there was an overall loss before tax of £7.7m (Q2 2011/12: profit £16.8m). Q2 operating profit margin was broadly in line with the prior year at 4.4% (Q2 2011/12: 4.5%). Net interest costs were £18.6m (Q2 2011/12: £18.7m).


Our Poultry division saw year on year LFL sales increase by 2.2% for Q2. LFL operating profit margin in Poultry was slightly ahead after the impact of higher feed costs, which we recovered with a lag. As with many food commodities, we expect feed price inflation to continue.  We are investing in new capacity at several of our Poultry processing sites to support existing business and for future growth. Looking ahead to H2 in our European business, we expect to see the effects of new retail business won last year.


Chilled Q2 LFL sales were up 9.7% whilst LFL operating profit margin was down during the quarter, in tough market conditions. This reflected the impact of inflation, investing with customers to maintain sales growth in a competitive market and the poor weather during January, as many consumers stayed at home. In a solid run up to Christmas, Chilled delivered over two million ready meal accompaniments and two million festive sandwiches, and our product offerings continue to remain popular. Our Christmas puddings business once again delivered indulgent and popular products for our customers. Looking forward, we expect considerable volume reduction in beef related ready meals during the second half year, following horsemeat issues affecting the food industry.


In Branded, year on year LFL sales were up 6.2% with Frozen recovery continuing and Biscuits remaining tough during the quarter, reflecting consumers trading into own label and higher promotional activity. LFL operating profit margin was broadly flat year on year. Frozen continued to implement its marketing plans for the Goodfella’s brand and also launched a microwaveable version of San Marco pizza, targeted at cash conscious consumers. In Biscuits, our seasonal business delivered on plan, but with higher levels of promotions needed to drive sales. Our new MD, Colin Smith, is now in place to drive our Fox’s brand in a tough Biscuits sector..

Acquisition of VION UK Poultry and Red Meat businesses

On 4th March 2013 we announced the acquisition of VION UK’s Poultry and Red Meat businesses. The acquisition, which was funded from cash and completed on 8th March, will help to further diversify the meal occasions which we serve. It provides us with additional capacity to meet our customers’ demands for quality and value for money products. The acquisition also helps secure a viable future for these businesses, which have faced an uncertain future in recent months, and safeguards a key supply chain for British meat. The Poultry business in particular lost large volumes of business over the last 12 months, and faces significant trading losses, having struggled in tough and competitive market conditions. We will bring our poultry sector skills to implement a two year turnaround plan, and support development of the Red Meat business with our strong customer relationships.

Debt funding and cashflow

Our long term funding remains in place, with the senior £400m 9.875% and €340m 9.75% notes due April 2018 providing the principal funding for the Group and our £40m Revolving Credit Facility (to April 2016) remains undrawn. We continue to relentlessly focus on cash and with the seasonal working capital improvement, net cash inflow from operating activities was £82.5m before interest, tax and capital expenditure.  Our net debt:EBITDA ratio improved slightly at 2.69 times (2.77 times at the end of Q1) but does not include the effects of the acquisition of VION’s UK Poultry and Red Meat businesses, which was completed on 8th March 2013. Our medium term strategy to lower our leverage ratio towards investment grade metrics by 2015 remains unchanged. Net debt at 26 January 2013 was £524.5m, which included cash balances of £174.3m.


Looking ahead, we remain cautious on the outlook, reflecting the tough and competitive market conditions. We expect continued food commodity inflation, volatile feed prices, high levels of promotions and considerable volume impact in the ready meals sector during the second half, following the media coverage on horsemeat. These, together with the VION acquisition which is currently loss making, are expected to dilute our % margins for the second half of our financial year. Reflecting these challenges, we will need to invest with our customers to maintain sales growth for the remainder of our financial year.


Please go to the Investor Relations section of the corporate website at www.2sfg.com for contact details.

About Boparan Holdings: 

Boparan Holdings is the holding company for 2 Sisters Food Group. We are a leading diversified food manufacturer with strong market positions in Poultry, Chilled, Bakery and Frozen categories. We focus on serving every meal occasion and putting our customers at the heart of everything we do.

Next update: Our Q3 2013 announcement will be made on 25 June 2013.