Investment the theme as egg packers post accounts
Noble Foods made a loss during the year in which it was formed through the merger of Deans Food Group and Clifford Kent Holdings (Stonegate). The company posted a pre-tax loss of £2.4 million in its financial report for the period ending September 30 2007. The loss was made on turnover of £444.3 million.
The period of the report ran from May 25 2006, when the company was incorporated to facilitate the merger of Deans and Stonegate. The Competition Commission later ordered that Stonegate should be sold as the merger may lessen competition in the market, although losses suffered as a result of the sale do not appear in the 2007 accounts. Noble says in the 2007 report, "The Competition Commission were closely involved in selecting the vendor and negotiating the sale price. The Stonegate business was therefore marketed for sale and the sale completed on 25 July 2008, resulting in a loss against the fair value of the business being incurred."
Losses suffered as a result of the sale will show up in subsequent Noble accounts.
In its directors’ report in the 2007 accounts, Noble talks of difficulties ahead. "A highly competitive market place and particular volatility in the egg sector indicate a challenging year ahead," it says. It says it is continuing to invest in product development and efficiency without compromising quality or delivery.
"Competitive pressure is a continuing risk for all of the group’s activities, which could result in losing sales to competitors and/or erosion of margin," says the report. It also says, "Price volatility of certain raw materials, notably the cost of feed for the shell egg business and the cost of eggs for the egg products business, could adversely affect results."
On the EU ban on conventional cages in 2012, it says, "The risk is that the shell egg business must incur significant capital expenditure to comply with the legislation.
Operational options are being actively considered and customers are being consulted in order to achieve an acceptable outcome for the company, its egg producers, its customers and their customers."
Meanwhile, Peebles-based Glenrath Eggs made pre-tax profit of £7.3 million in the year to May 31 2008. The figure was an increase on the previous year’s £3.9 million profit. Turnover in the 2008 accounts stood at £39.4 million.
John Campbell, who founded the business 50 years ago, has announced plans to invest £38million in the business to boost production. He said the investment was partly being forced by the EU ban on conventional cages.
Mr Campbell warned that the switchover was likely to result in many smaller producers quitting the sector. They would be unable to afford the £20 a bird investment needed for the enriched systems. He believes EU egg supplies could well run short, leaving the market open to eggs from overseas.
