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Poultry processor’s profits fall despite rise in sales

by 5m Editor
27 October 2005, at 12:00am

UK - Scot-lad, owner of the Joseph Mitchell poultry processing plant in Forfar, saw pre-tax profits decline during the year to January 1 despite a significant increase in sales. Joseph Mitchell, who jointly owns the company with brothers Mike and Stephen, said yesterday that the firm's profit margins had been held back by an increase in the number of people employed and rises in the cost of live chickens. As a result, pre-tax profits dipped to £2.4m from £3.2m previously, despite a near-23% rise in turnover to £35.5m. During the year under review, Scot-Lad opened a £2m extension to its Challenger Foods' subsidiary in Sunderland. This doubled capacity at the plant, which supplies poultry products to sandwich-makers. Despite this setback, Joseph Mitchell said the new business wins would eventually lead to higher profits in the future. Asked about the profit margins, he said Scot-Lad had "addressed those issues in the current year". The three brothers bought the business back from mini-conglomerate Saltire in 1997 by means of a £5.5m buy-out. They no longer owe any money from that deal, but are still carrying debt from the subsequent £3.3m acquisition of Challenger. Joseph Mitchell refused to be drawn on what effect the potential bird flu crisis was having on Scot-Lad's business. This was despite reports that the consumer market for poultry in some continental European markets has collapsed. "I don't think it is for me to comment on that," he said. "There have been lots of commentators saying various and sundry things, so I don't think we want to add anything to that." During the financial year just completed, directors chose not to pay themselves any dividend. Mitchell described this as a "personal decision" by the brothers, who shared a total of £75,000 in dividend pay-outs in the preceding year. Source: The Herald

5m Editor