UK potato supplier Produce Investments warned today (22 May) that its full-year profits will be “substantially below market expectations” after adverse weather conditions hit its Jersey Royals crop.
While the firm did not provide new estimates for profits through the 12 months ending in June, Produce Investments plans to shift its year-end to August to reflect the timing of the potato harvest in Jersey. Such a move, which is subject to regulatory approval, would not take place until at least the start of the next financial year.
In March, the company said full-year profits would be ”broadly inline with expectations” after returning to profit in the six months to 31 December.
At that time, Produce Investments reported a pre-tax profit of GBP2.1m (US$2.8m), compared to a loss of GBP1m in 2016, while operating profit surged to GBP2.4m from GBP0.2m. Revenue was up 1.6% at GBP80.6m.
Produce Investments said in a statement today the adverse weather “presented significant challenges both to planting of our early season potato crops in Cornwall and Jersey” and also to the harvesting of our daffodils. Rainfall on Jersey for the four months to the end of March was 46% above average, mixed with dry spells, while mean temperatures during the “critical” growing months of February and March were down.
Meanwhile, due to the challenging trading conditions, the company’s performance was below some of its assumptions made in what it called the 2017 impairment tests.
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The statement added: “Accordingly, we have already commenced work on the 2018 year-end testing which will be based on board approved budgets and forecasts and will be subject to audit in due course. It is too early to quantify the results of the impairment testing, but the board would expect the tests to result in a significant ‘non cash’ impairment ,which will reduce ‘unadjusted’ reported profits for the year.”