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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 25 January 2014.

Q2 2013/14 Financial highlights

 Q2 2014Q2 2013Q2 2014 vs Q2 2013
Total sales £848.0m £626.5m +35.3%
LFL sales* £647.2m £623.0m +3.9%
Operating profit before exceptional items** £13.3m £26.1m (£12.8m)
LFL Operating profit** before exceptional items £15.3m £26.2m (£10.9m)
Loss for the year after exceptional items, interest and taxation (£27.5m) (£12.3m) (£15.2m)
Netet cashflow from operating activities £33.6m £82.5m (£48.9m)
Net debt*** £572.3m £524.5m +£47.8m
Net Debt: EBITDA 3.45 2.70 (0.75)

* Like for like (LFL) sales are based on the 13 weeks ended 25 January 2014 compared to the 13 weeks ended 26 January 2013. LFL excludes sales in relation to the Vion acquisition and foreign currency effects.
** Operating profit before exceptional items includes the Group’s share of operating profit/(loss) from Joint Ventures.
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £132.5m (Q2 2013: cash balances of £174.3m)

Q2 2013/14 Operational highlights

  • In tough trading conditions Q2 was in line with expectations:
    • Like for like (LFL) sales up 3.9%
    • Good performance in Protein. Vion integration progressing on plan
    • Steady improvement in Branded
    • Chilled operational performance impacted by significant investment in  around 100 new products for Autumn launch & to deliver Christmas ranges for our customers as explained
    • Working with our customers to stabilise and deliver profitable growth in Chilled


  •  Investing in growth and lowering cost base:
    • Investing in added value capacity in Cambuslang
    • Investing in capacity for growth in Meal Solutions and specialist bakery
    • Closed loss making Haughley Park in November
    • Addressing higher poultry cost base in Scotland by exit of Letham site and improving efficiency at Coupar Angus
    • Announced consultation on 7 February 2014 at Corby and Avana

Ranjit Singh, CEO of 2 Sisters Food Group, said: “This has been a very challenging quarter, but we delivered a creditable performance in Q2, despite the tough and competitive market conditions. We delivered for our customers over the key Christmas trading period, but in line with expectations, this impacted profitability in Chilled due to the significant investment made in product launches and disruption costs of new ranges. Protein made good progress with the integration of Vion on plan, we continued to make steady progress in Branded and we are taking actions to address Chilled performance and investing in capacity to meet our customer growth plans.

“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 Group to bring about long-term growth benefits.

“We continue to invest in capacity to fuel our growth and to address our cost base, which means we have to make tough decisions and following the exit of two sites in Q1, regrettably on 7 February 2014 we announced consultation on the future of the sites at Corby and Avana.”

Q2 2013/14

Group like for like (LFL) sales increased by 3.9% and total sales including Vion were ahead 35.3%. LFL operating profit before exceptional items for Q2 was £15.3m (Q2 2012/13: £26.2m) with improvements in Protein and Branded offset by lower profitability in Chilled.

Group operating profit including Vion before exceptional items was £12.8m lower than last year at £13.3m with Vion integration on plan. We continue to address our cost base and exceptional items in Q2 comprise mainly the impairment charge of £20.7m relating to Corby and Avana which are in consultation.


Protein LFL sales increased by 13.8% versus Q2 last year driven by business gains and annualised inflation offset by lower volumes and promotions. 
LFL operating profit was ahead of Q2 last year driven by the business gains and improved efficiency through investment in sites.

The integration of Vion is progressing on plan to return to profitability with a single management team responsible for all UK poultry operations. Our European business continues to diversify its customer base with retail and other channels, in line with our strategy.

We continue to address our cost base and save future capital expenditure by restructuring our Scottish poultry business with the exit of the Letham site and shift changes at Coupar Angus.

As well as addressing the cost base, we are investing in growth as we announced a substantial expansion plan in poultry cooking at our site at Cambuslang, Scotland.


Chilled LFL sales for Q2 were down 5.5% with an increase in sales in Meal Solutions driven by the significant number of new product launches offset by lower sales in  Food To Go.

Chilled profitability was significantly lower, in line with expectation, as we invested heavily in additional costs  to deliver a significant  re-launch of ready meals in the Autumn to bring consumers back into the category and to deliver for our customers in the key Christmas period.  Sales and profitability were also impacted by operational disruption due to the proposed closure of the Corby and Avana sites.

We are investing in capacity at our four Meal Solution sites and our specialist bakery site to meet customer growth and improve efficiency.


We were pleased to see further improvement in Branded profitability with Frozen showing significant recovery and Biscuits stabilising. LFL sales in Branded were 3.6% lower, with pizza driving improvement in Frozen, whilst Biscuits sales were impacted as we addressed sales and promotion mix.

Branded operating profit improved driven by new product launches, more focussed promotions and tight cost management. We launched Goodfella’s Extra Thin as well as developing our new product pipeline in Biscuits.

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 £33.6m before interest, tax and capital expenditure. Our medium term strategy to lower our leverage ratio towards investment grade metrics by 2015 remains unchanged. Net debt at 25 January 2014 was £572.3m, which included cash balances of £132.5m.


Looking ahead, we remain cautious on the outlook, reflecting the challenging market conditions. We continue to adapt to changing retail and consumer environment . And we believe we are taking the right actions in the long term to address these challenges to support recovery and invest for future growth.


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 updateOur Q3 2014 announcement will be made on 17th June 2014.