PIZZA, poultry and puddings giant 2 Sisters Food Group posted strong growth in quarterly sales and profits and said its integration of Northern Foods is on track.
The group, which paid £342m to take Northern private about a year ago, said Christmas trading was “solid” and dominated by promotions.
The company, which is owned by poultry magnate Ranjit Singh Boparan, reported pre-tax profits up 79 per cent to £16.8m in the 13 weeks to the end of January.
The group, now the UK’s fourth biggest food manufacturer, grew like-for-like (LFL) sales 10.2 per cent to £559.7m. Total sales rose almost 13 per cent to £571.8m.
The company has upped its sales guidance for the full year to seven or eight per cent LFL growth. Sales growth in its second half is expected to ease.
“Whilst we remain cautious in our outlook for the year as a whole and mindful of the highly competitive market environment, we remain in a good position to grow our business over the year,” said the company.
Mr Boparan said: “2 Sisters has continued to deliver good sales progress in the second quarter, building on the momentum from our first quarter and demonstrating how our virtuous circle to drive volumes and improve efficiency is working.
“Despite the challenging and competitive trading environment we operate in, we have recorded good sales growth as we work closely with our customers to deliver value to the consumer. At the half-way stage of our financial year, performance remains in line with our expectations.”
The company, which owns the Goodfella’s pizza and Fox’s biscuit brands, said it is on track to make integration savings nearer £25m through merging Northern – the upper end of its expectations. Last year it closed Northern’s head office in Leeds, and has established a ‘shared service centre’ in Wakefield.
2 Sisters funded the acquisition through a high interest bond issue. It ended the period with net debt of £630.8m, down from £647.2m at the end of October, as it continues to ‘deleverage’.
The company said it had cash of £67.2m, plus access to a £40m credit facility.
That was despite spending £30.6m late last year buying dessert and cake-maker Brookes Avana from Premier Foods, which had sales of £203.6m in 2010.
“We continue to relentlessly focus on cash and drive working capital,” said the company.
However, it may have to sell Avana’s Christmas puddings business after the Office of Fair Trading raised concerns about it dominating the Christmas puddings market. The business is worth around £10m in sales and would have taken 2 Sisters to about 75 per cent market share. The remaining 96 per cent of the acquisition has been cleared.
The group added it sees little sign of ingredient inflation easing from its current seven per cent.