Cranberry Foods in restructuring deal as profits drop
A long-term decline in the UK's turkey meat market has continued to hit Derby-based Cranberry Foods' bottom line. Despite a boosted turnover, the turkey producer posted a reduced profit as the market continues to fail. Cranberry Foods revealed it completed a multimillion-pound debt and equity restructuring in the months after the profit drop was recorded.
The company, which was established in 2003, specialises in rearing, processing and marketing turkeys. For the year ending 31 December 2010, Cranberry Foods posted a turnover of £83.8m, a jump on the previous year's figure (for the seven months to 31 December 2009) of £59.5m.
However, despite a growth in sales, the company failed to match its 2010 pre-tax profit of £4.2m, recording a £3.1m gain.
In a statement in its financial accounts, the company said: "The UK turkey sector has seen a long-term decline in poults placement since the late 1990s…an ongoing decline in per capita consumption is a concern."
After posting the reduced profit at the year end, Cranberry Foods undertook a debt and equity restructuring in February 2011, raising the company's loans to £12m. The company said the effect of the borrowing was to increase net assets by £6m.
Prior to the restructuring, bank loans comprised a £13m term loan facility, of which £5.7m was outstanding at 31 December 2010. Part of the loan was repaid once the additional restructure was introduced in February, the company confirmed.
Over the course of the year, Cranberry Foods recruited an additional 65 people, taking the total number of employees to 645. The amount spent on staff wages and associated costs also rocketed, from £8.3m in 2009 to £15.7m in 2010.
The company said that "a burden" was placed on its operations over the course of the year as new European poultry meat marketing regulations came into force on 1 May 2010.
"These regulations meant that some key product lines had to be produced as fresh products in the Christmas production window rather than being produced throughout the year and frozen," said the company.
"However, the directors are pleased to report that although this has placed more of a burden on Christmas production, the company's continued focus on a strong quality and service ethos has enabled the company to successfully adjust to this."
For the second consecutive year, no dividend was paid out to shareholders.
