Boparan's Northern Foods hit by £50m costs
Almost £50m-worth of restructuring bills caused by closing and mothballing factories, takeover deals and cash costs led Northern Foods to make a total loss of £13.2m in its latest yearly accounts.
But the food manufacturer said it has since "traded solidly" and is now in a "stronger position to compete in a tough environment" following its multimillion-pound takeover by Birmingham entrepreneur Ranjit Boparan.
The accounts, seen by Insider, cover the 12 months to 2 April 2011 - the period before Boparan Holdings, which also owns the 2 Sisters Food Group, bought the food producer for £342m.
The accounts reveal a £42.1m drop in revenue to £934.9m and net debt of £208.6m though Northern Foods said Boparan has since repaid a revolving credit facility and US private payments.
The Leeds-based business nosedived from a £13.8m total profit for 2010 to a £13.2m loss - of which, £12.3m losses were made before tax.
Northern Foods directors said in their report that the losses were made up of a £49.6m loss coming from restructured items. These included £5.2m lost from the closure of its Fenland and ethnic cuisine factories, £3.7m tied to selling its Dalepak site, £8.4m in rationalisation costs, £5.5m for mothballing a production line at its Green Isle site, £13.3m in cash costs and £17.4m in merger and takeover costs.
Taking out these costs, the company reported a drop in underlying profit before tax from £39.2m to £37.7m which it said "reflected the weaker frozen performance". In its frozen food division, which includes Goodfella's pizza, revenue plunged from £254.6m to £188.6m and a £6m operating loss was made excluding restructuring items - down from £13.6m.
It fared better though in its chilled division with a £33.2m operational profit excluding restructuring items and £513.6m-worth of revenue - this followed supply deals with BA and Costa Coffee. The bakery division, which includes the Fox's brand, remained stable with £232.7m-worth of revenue and a £4.5m rise in operational profit excluding restructuring items to £26.3m.
The directors said the business had been streamlined from five sections into two divisions and had also been taking action on reducing pension risk.
Looking ahead, they said: "Northern Foods has traded solidly in challenging market conditions. The acqusition of Northern Foods by Boparan leaves the enlarged group in a stronger position to compete in a tough economic environment."
Boparan succeeded in his tumultuous takeover of Northern Foods in March this year. After beating off competition from Dublin-based food company Greencore, he purchased the company for £342m.
