Ice cream maker Richmond Foods has announced a rise in pre-tax profit for the 53 weeks ended 2 October 2005, despite a fall in turnover.
Turnover for the period was GBP141m (US$243m), compared with GBP 144m in the 52 week period ended 26 September 2004. Pre-tax profit was GBP14.407m, compared with GBP13.291m in the year earlier period.
Chief executive James Lambert said the rise in profit was because the company had improved levels of innovation and reduced its direct cost base.
He gave four reasons for the fall in turnover. “Firstly, a number of the products of the De Roma business, purchased from the receiver in February 2004, were unprofitable and could not sustain either price increases or renovation,” he said. “We therefore decided to cease manufacturing them.”
“The second reason was that we decided to withdraw some of our Nestle branded products from “buy one get one free”, as they were not profitable, and to relaunch renovated products during the current year at “every day low prices”. This resulted in more than £1.5m in lost sales during the year but improved margins,” he said.
“Thirdly, as a result of changing the stockholding and distribution arrangements with a major wholesaler in the previous year, £1.5m of sales recorded in our 2004 financial year were not sold by our customer until well into the 2005 financial year,” he said.
“Finally, Richmond lost sales of own-label products following the merger of
Safeway with Morrisons,” he said. “However the relaunch of the Nestle brand and the continuing success of the Skinny Cow brand, so far in the current year, have led to significantly improved sales with Morrisons as with other retailers.”