2 Sisters acts to pass on higher costs to retailers

PIZZAS to poultry giant 2 Sisters Food Group said it made a “solid” start to its financial year, increasing first quarter sales and profits despite high commodity inflation and cash-strapped shoppers.

Price rises for food, particularly bread and potatoes, have kept inflation at six-month highs, official statistics showed yesterday.

2 Sisters, which owns Northern Foods, said it is cautious on the outlook, but the group said it has made “good progress” passing on higher costs to retailers.

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The company is now one of the UK’s biggest food producers.

Its like-for-like sales grew five per cent to £587m and pre-exceptional operating profits rose 13 per cent to £30.7m in the 13 weeks to October 27.

2 Sisters reported growth in its chilled and poultry divisions and a steady performance in branded goods.

It described the biscuits market as tough and highly promotional while the recovery in the frozen division is continuing.

The group has invested in its Fox’s Biscuits brand with TV, radio and social media adverti- sing.

Ranjit Singh, 2 Sisters’ chief executive, said: “We have made a solid start to our new financial year, in challenging market conditions.

“Despite the tough consumer environment and lapping sales gains made last year, we grew sales during the first quarter as we work hard to deliver food for every meal occasion.

“Trading conditions remain challenging, with high food commodity inflation, notably poultry feed costs and increased levels of promotions.”

He said the group has made good progress in recovering the impact of higher feed costs.

“By continuing to put the customer at the heart of everything we do, and being prepared to invest in growth, we remain well placed to grow our business,” he said.

The poultry division reported a 6.2 per cent increase in like-for-like sales.

“We will see some short term margin pressure in poultry, with a lag between the impact of higher feed prices and recovery,” said Mr Singh.

“In the longer term, we expect the trend for market growth in poultry to continue, driven by the relative lower cost and health attributes of poultry.”

The chilled division reported a 6.3 per cent increase in like-for-like sales.

“Our core markets of ready meals, sandwiches, salads and pizza continue to grow,” said Mr Singh.

“In ready meals, we launched Asian cuisine and we are focusing on restoring growth to the Brookes Avana ready meals and cakes business, which we acquired in December 2011.”

The group will close the Brookes Avana Leicester site in 2013.