Greenvale owner Produce Investments Plc has reported an increase in operating margins for 2012 – but warned that the heavy rainfall is set to take a toll on its next set of accounts.
PI, which reported results for the 53 weeks to 30 June 2012 to the City last week, said the low-priced potato season the year before had been behind turnover falling from £171.4 million in 2011 to £153.9m in 2012. During the year the group's fixed-price procurement contract model meant it could not fully take advantage of relatively low farmgate prices on the back of a six million tonne crop, the company said.
Despite that, pre-tax profits rose substantially to £6m, up from £2.6m the year before, with operating margins improving from 3.8 per cent to 4.5 per cent. Net debt was almost halved from £8.1m to £4.3m.
The heavy rainfall that has hit the whole potato industry hard is set to impact on the next financial report, chief executive Angus Armstrong warned. “In 2012 the wettest spring and summer in over 100 years is impacting crop production quite significantly. This is likely to result in a lower than average UK yielding crop, which will lead to higher than average prices,” he explained.
“The group's procurement model, which fixes a large element of crop in advance of the season, will partly mitigate some of this increase but crop failures, yield reduction and high waste will be more prominent than seen in recent years and is expected to impact group performance in the year ahead.”
Elsewhere the company completed its acquisition of Rowe Farming last week, and said the launch of its own branded potato – Greenvale Farm Fresh – had seen “very encouraging” sales in its early days, with “clear evidence of the brand bringing new customers into the category.”
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