United Biscuits records huge profit growth

By Anita Awbi

- Last updated on GMT

Related tags: United biscuits, Profit

Despite a tough trading environment and serious fire damage to a
processing plant, British snack firm United Biscuits has delivered
a sizeable full-year profit rise of 25 per cent.

The maker of McVitie's biscuits and KP Nuts saw profits for 2005 jump to £204m - up from 2004's £163m - bolstered by contributions from Jacob's and Truinfo snack brands acquired in the latter half of 2004.

And sales revenue has risen 4.7 per cent to £1.3bn, compared to last year's £1.2bn, allowing the company to make inroads into debt taken on for the recent acquisitions and extended product lines.

The stable growth comes despite a serious flood in the Carlisle factory last January that caused £10m worth of damage and halted baking for two months.

"While the market remains challenging, our financial performance during 2005 reflects the success of the strategies we initiated in 2004,"​ said chief executive Malcolm Ritchie.

"Our cost reduction programmes are on track and we've had strong trade and consumer response to our new product launches. These activities demonstrate our strategy of releasing cost to invest behind our brands and drive profitable growth,"​ he added.

Total key brand revenue rose by two per cent, reflecting the company's continuing focus on marketing and innovation of priority products.

Now 88 per cent of UB's portfolio is branded. And the firm is using these household names to capture the trend for healthy eating by introducing lighter alternatives for core brands, such as Rich Tea Lights and Jacob's Lights.

And over the past year the manufacturer has introduced new nutritional labelling to appeal to consumer concerns, courting FSA recommendations for improved product information.

This change in focus, coupled with cost savings through 2005 led to a 2.7 per cent improvement in business profit margins, claims the company.

The outlook for 2006 looks equally stable.

In February UB acquired the former Golden Wonder brands Nik Naks and Wheat Crunchies from Tayto to extend its position in the UK snack market.

Ritchie said the acquisitions will develop the company's share of the UK savoury snacks market, as the company is well placed to take advantage of opportunities in core business areas.

The brands will continue to be produced at Golden Wonder's factor in Scunthorpe under a co-manufacturing agreement with Tayto, which acquired the facility.

Meanwhile some speculators have suggested UB is strengthening its position ahead of floatation on the London Stock Exchange but the company has not confirmed this.

Related topics: KP Snacks, Markets

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