Uniq has announced that foot-and-mouth will cut profits by GBP3.5 million. It’s another major blow to Uniq’s struggling pig meat processing business, Malton Foods. Losses for the division are now expected to be in the region of GBP12 million. Uniq’s plans to refocus on the convenience food sector may be a good idea, but the UK firm’s unlikely to get much done until the epidemic is over.
Malton Foods, Uniq’s pig meat processing division, was already making losses before the foot-and-mouth crisis hit Britain. Swine fever and the strength of the pound hurt sales considerably, and Uniq had already issued a profit warning in February relating to problems at Malton and rationalization costs elsewhere in the business. Wednesday’s statement gave details of the extent of Malton’s losses, which will have increased by a further GBP3.5 million by the end of next week due to the new outbreak.
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Malton was unable to slaughter for 10 days when animal movement restrictions were imposed, but is now back to previous slaughter rates. And losses may very well continue: an additional GBP5 million will be lost over the next financial year if the export ban continues. But cost-cutting measures are being put in place, which the company estimates will save GBP17 million a year – enough to make Malton profitable.
Losses for the pigmeat business are now expected to be in the region of GBP12 million, significantly hurting Uniq’s profits. February’s warning cut profit forecasts for the year to March 31 from an expected GBP66 million to GBP60 million. Now, Uniq is expecting profits of nearer GBP57 million, not including exceptional charges of GBP122 million.
Uniq was already looking for ways to make Malton less of a burden, either by exiting or significantly reducing its interest in the UK’s largest pig meat processor. If the restructuring works, export bans are lifted and Malton is able to return to profitability, the whole process will be a lot less painful for the company. But they are rather big ‘ifs’.
Despite plans to refocus Uniq on the convenience food sector, it looks like the business won’t be making much progress in that direction any time soon. The demerger of its logistics division, Wincanton, and the problems with Malton will be taking up all the management’s attention. Until everything has settled down, Uniq is unlikely to make much headway.
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