UK-based convenience food group Uniq has said that its outlook for the full year is “substantially below expectation”, as it expects operating profit for the first half to be close to breakeven due to a disappointing second quarter in the UK and Northern Europe.
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“Against this background, Geoff Eaton, who became chief executive on 1 August, is taking firm and swift action to achieve an increased pace of change to position the business for sustained recovery and profitable growth in the future,” the company said in a trading update ahead of its half-year results for the 26 weeks to 1 October 2005.
The company said that in Southern Europe, year-to-date sales in convenience (chilled/frozen) foods have been flat. The overall chilled market growth was slower than expected but the Marie brand grew its market share. The decline in Marie frozen sales continued, although there is early evidence that new product launches in the autumn could slow this trend, Uniq said.
In Northern Europe, year-to-date sales are down by 5% and have been below management expectations due to poor summer weather and competitive activity. While cost saving plans have offset some of the impact, margin performance remains below last year. Initiatives are in place to improve performance into the second half including both volume gains and cost reductions. However, the outcome for the year is likely to be below last year, Uniq said.
The company said the UK is where the position is most challenging, where there are the greatest opportunities for recovery, and where significant new actions to improve future performance are being implemented. Although sales in the first five months were down by just 0.3%, the division overall incurred losses of £6.5m (US$11.5m), compared to a £1.1m loss a year earlier. The most significant factors behind this deterioration were the ongoing labour, waste and supply chain problems in desserts at Minsterley and the loss of salad business in the prior year at Spalding. The remaining UK businesses have, overall, performed ahead of management expectations.
“After two months in the role I have identified significant opportunities and initiatives for improvement in each of our divisions. Clearly we face a challenging trading environment, a significant programme of change and it will take time to deliver. However, the agenda for change is dynamic and exciting as we focus on optimising the value in each business we operate,” chief executive Geoff Eaton said.
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