Geest released interim sales figures, showing seven per cent growth. and total operating profit before goodwill of £15.6 million, despite the tough UK food retail trading environment.
Operating profit was lower than last year due to a number of factors including: the impact on sales of the Morrisons acquisition of Safeway, the loss of some produce business, foreign exchange and the adoption of FRS 17 "Retirement benefits" for pensions accounting.
Geest has also acquired Anglia Crown, a £16 million turnover business, which supplies fresh delivered meals for patients in UK hospitals - opening up a new revenue stream. The total UK market for hospital food is worth some £250m and there is an increasing demand for outsourced fresh, healthy and convenient food. Anglia Crown is number two (and the leading player in fresh meals) in the £65m outsourced market sector which is growing rapidly.
The group used its interim results statement to announce new efficiency programmes to support margin on plan and a new margin improvement initiative through management structuring.
In the six months ended July 3 2004, more than 550 new products were launched and new trade channels secured to enhance revenue and profit opportunities.
Sir John Banham, chairman of Geest plc, said: "We continue to see strong consumer growth for fresh prepared foods. However, the UK trading environment for food retailers continues to be challenging and has created increasingly turbulent trading conditions for suppliers and which are affecting our results this year.
"We have responded by improving operational efficiencies and developing new revenue streams. The efficiency programmes, which we outlined at the beginning of the year, have matched our expectations and have started to help us maintain margins, despite continuing selling price deflation. This is an excellent achievement which, coupled with new revenue streams, means that Geest is better equipped than ever before to face the challenges ahead. That confidence is reflected in the Board's decision to increase the interim dividend by eight per cent."
In continental Europe, fresh prepared food sales grew by 17 per cent to £42.1m (2003: £36.0 million).
See next week’s Journal for more details.
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