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Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its third quarter (Q3) results for the 13 weeks ended 26 April 2014.

Q3 2013/14 Financial highlights

 Q3 2014Q3 2013Q3 2014 vs Q3 2013
Total sales £811.4m £764.8m 6.1%
LFL sales* £744.7m £727.6.m 2.4%
LFL Operating profit* before exceptional items £22.0m £16.0m £6.0m
Operating profit** before exceptional items £19.4m £15.4m £4.0m
Loss on ordinary activities after taxation (after exceptional items) £(28.6)m £(8.2)m £(20.4)m
Net cashflow from operating activities £3.9m £18.1m £(14.2)m
Net debt*** £587.6m £565.4m £22.2m
Net Debt: EBITDA 3.46 3.15 0.31

*Like for like (LFL) sales are based on 13 weeks ended 26 April 2014 compared to 13 weeks ended 27 April 2013. LFL excludes sales in relation to the Vion acquisition, the site closures and foreign currency effects. 
** Operating profit is before exceptional items and 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 £115.5m (2013: £134.3m).

Q3 2013/14 Operational highlights

Q3 Improvement in line with expectations:

  • Good top line sales growth up 6.1% vs Q3 LY, like for like sales up 2.4%
  • LFL Operating profit up 37.5% to £22.0m
  • Strong sales performance in Protein (+4.8% LFL); Good progress with Vion integration
  • Steady improvement in Branded with Qtr on Qtr improvement in margin
  • Chilled stabilising and working with customers to deliver profitable growth

Investing in growth and lowering cost base:

  • Completing investment and consolidation of cooked meats at Cambuslang following Haughley Park closure in H1
  • Progressing cost reduction plan in Scotland, consolidating production at Coupar Angus following exit of Letham
  • Chilled announced exit from loss making salads and cakes following completion of consultation at Corby and Avana
  • Investing in capacity for growth in Meal Solutions and specialist bakery

Ranjit Singh, CEO of 2 Sisters Food Group, said: “We have delivered an encouraging set of results with good top line sales growth and improved profitability in line with our expectations.  
“We are seeing the benefits of actions taken to improve profitability across our three divisions and are working with our customers to build a platform for future growth.  We delivered strong sales performance in Protein and made good progress with the Vion Integration, driving profit improvement. The actions to address the challenges in Chilled are stabilising the business and we continue to work towards initiatives to improve profitability such as exiting the unprofitable salads and cakes business.
“We are investing in capacity in our existing sites to drive efficiency and investing in innovation to provide great food at great value. This will drive long term growth with our customers and help build a bigger and better business.”

Q3 2013/14

Group total sales increased by 6.1%, with like for like (LFL) sales increased by 2.4%.  LFL operating profit before exceptional items increased by 37.5% to £22.0m (Q3 2012/13: £16.0m). We continue to address our cost base and we are exiting the loss making salads and cakes businesses. Following completion of consultation at Corby and Avana, the exceptional charges of £34.1m in Q3 include provision for the period and for future exit costs and losses.  


Total protein sales increased by 18% compared to Q3 last year to £536.2m, with like-for-like sales up 4.8% to £489.7m, driven by retailer promotions driving market growth and business gains. Profitability also improved compared to last years’ Q3 as we made good progress in driving the integration benefits from Vion, as we deliver cost savings from the planned restructuring our Scottish poultry business with the exit of the Letham site and restructuring at Coupar Angus. We expect to complete the capacity investment and consolidation of cooked meats at Cambuslang by the year end following Haughley Park closure in the first half. We continue our strategy of diversifying the customer base for our European poultry business.


Chilled Q3 LFL sales were slightly lower by 0.5% and operating profit was below last year Q3, however both sales and profitability show an improving trend compared to Q2 as we stabilise operations. We also announced the exit from the loss making salads and cakes businesses following completion of consultation at Corby and Avana. 
We continue to invest in innovation capability and in capacity at Meal Solutions and  specialist bakery sites to provide a platform for future growth with customers and improve efficiency.


Branded LFL sales were 4.6% lower whilst operating profits improved compared to last years’ Q3 as we continue to address sales mix by exiting unprofitable business areas and drive efficiency. 
In Frozen, we grew pizza sales and continue to explore new channels such as exports and national distribution of Holland’s pies. The new team in Biscuits is progressing plans to reinvigorate the Fox’s brand with development of new products, packaging and media planned for later this year.

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. Net cash inflow from operating activities in the quarter was £3.9m before interest, tax and capital expenditure. The reduction in cash flow was driven by a one time impact of working capital and exceptional costs relating to the site exits and Vion integration and restructuring. Our Net Debt:EBITDA ratio was 3.46 times (vs 3.15 times last year). Net debt at 26 April 2014 was £587.6m, which included net cash balances of £115.5m. Our £40m RCF remained undrawn through the period.


We are pleased with the progress made in Q3 and remain cautiously optimistic on the future outlook. We continue to adapt to the changing retail and consumer environment and believe we are taking the right actions to drive future growth as well as to lower our cost base. We remain focussed on investing for future long-term growth to build a bigger and better business.


Please go to the Investor Relations section of the corporate website


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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 FY 2014 announcement will be made on 21 October 2014.