2 Sisters Food Group owner predicts hit from factory suspension following safety concerns

2 Sisters Food Group's factory in Flixton. Picture: Steve Parsons

2 Sisters Food Group's factory in Flixton. Picture: Steve Parsons - Credit: � EDP pics 2004

The parent company of poultry giant 2 Sisters Food Group has reported a hit to margins and warned of the impact expected from a food safety scandal.

Boparan Holdings posted increased sales but a fall in profits for the final quarter of 2016/17, the 13 weeks to July 29.

An investigation into standards at its West Bromwich factory led to suspension of operations on October 1, which the company said would hit next year's first quarter results.

Following a retraining programme Boparan Holdings, whose owner Ranjit Singh Boparan also owns Bernard Matthews, had recommended supply begin again from November 6.

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The company blamed inflation and foreign exchange costs for halving its margins which fell to 1.9% from 3.8% in quarter four of 2015/16, meaning like-for-like operating profit came in at £14.8m – down from £29.3m.

Boparan Holdings made a £17.6m loss after exceptional items for the period, compared to £5.4m last year.

The company, which also runs poultry factories at Thetford in Norfolk and Flixton near Bungay, said exceptional items had included costs in relation to financial reporting and control issues at a subsidiary as well as redundancies as a result of a closure of a site.

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Mr Boparan, 2 Sisters Food Group chief executive, said: 'The business continues to face into an extremely tough trading environment with further increases in input costs.

'Clearly margin performance improvement is a top priority, and this will be underpinned by working hard on the action plans that make the most difference to our core business.

'Nevertheless, we remain positive about our top line growth and how that positions us with our customers.

'We continue to progress our poultry footprint changes, which delivers quality, safety and a shorter, leaner, more transparent supply chain. We are investing in our people and our sites, with a view to optimising available capacity.

'Our meals division has benefitted from rationalisation and investment which will also provide a springboard for further growth. However, as with our branded businesses, cost inflation has negatively affected margins, and our teams are taking ongoing actions to redress the balance.

'While this will not happen overnight, our management team are focused on delivering our step change plan to enable us to continue on our journey of producing high quality and safe food.'

Bernard Matthews is a member of the EDP/EADT Top 100 list of companies in Norfolk and Suffolk by highest turnover.