Insider Media Limited

Freezing winter months have been blamed for plummeting profits at potato and vegetable sourcing company Manor Fresh, Insider can reveal. The Spalding-based producer said profits dropped from £1.05m to £702,122 in the year ending 30 April after a winter of "devastating" weather conditions.

Manor Fresh sources, packs and sells the vegetables from its Lincolnshire base.

Despite a fall in profit, turnover rose slightly from £56m in 2010 to £58.2m in 2011. Sales to retail customers also picked up by 6 per cent over the year on a like-for-like basis.

The company said this boost was due to the extensive use of retail price discounts and multi-buy promotional offers to which it contributes "significant sums"

However, Manor Fresh did experience a drop in profit following harsh weather conditions.

The company said: "Prolonged freezing conditions in the winter months had a devastating effect on locally grown green vegetables, with crops completely lost to the frost. The resultant supply shortage drove up input prices which were not adequately covered by retail price increases and this too had a detrimental effect on margins."

Cost of sales was also driven up, hitting £54.4m in 2011, compared with £51.2m in the previous year.

Manor Fresh said it also struggled to offset the impact of raw material price inflation, despite investing in new handling equipment and paying close attention to production costs.

Sales of organic produce remained static, said the company, but the sector is now showing "tentative signs of recovery".

The vegetable supplier said it still felt detrimental effects from the recession, during which time "many consumers became…more price conscious and elected to trade down…to ranges with lower retail price points," it said. Retaining and winning back these shoppers is a key priority going forward, the company confirmed.

Earlier this year, Manor Fresh was awarded the Best New Edible Variety accolade at the Grower of the Year Awards. The company's flower sprout product, which is sold exclusively to retail giant Marks & Spencer, was named the year's best new product. It is the first new vegetable to be sold in Marks & Spencer stores for ten years.