Farmfoods has reported a 44 per cent drop in profits in its latest accounts as it highlighted competitive conditions in the grocery retail market.
The Cumbernauld-based frozen food specialist, which has about 300 shops in the UK, booked pre-tax profits of £15.1 million for the 52 weeks ended December 28. This compared with profits of £27m the year before.
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Accounts newly filed at Companies House show the profits fall came as turnover leapt to £689.1m from £569.3m in 2012.
The revenue rise came as the company, majority owned by director Eric Herd, boosted staff numbers to 3891 from 2986, with the bulk of the workforce employed in its retail operations.
The company invested £8.72m in freehold property over the year, compared with £14.7m in similar outlays last year, but the accounts did not specify whether this included store acquisitions.
No final dividend was recommended by the directors, the accounts show, meaning the total dividend for the period was £9 per ordinary share. The shares are entirely held by the Herd family.
Staff costs rose to £57.3m from £39.1m over the year, while directors' emoluments fell to £1.44m from £2.35m.
The highest-paid director received £425,000, not including pension contributions, down from £505,000 the year prior.
Farmfoods declined to comment on the accounts.
However, the directors state in their report that "trading conditions have been and are expected to remain competitive" in the food retailing market.
That sentiment has been reflected by recent updates from major supermarkets, which have come under pressure from the squeeze on household budgets.
Tesco, Asda and Morrisons have triggered a wave of price cuts this year to combat subdued consumer spending and to win back market share as shoppers have turned to discounters Aldi and Lidl.
Tesco's travails were underlined this week when it unveiled its worst quarterly sales drop in 40 years, though chief executive Philip Clark insisted its turnaround strategy was beginning to bear fruit.
In spite of market pressures the British Frozen Food Federation (BFFF), of which Farmfoods is a member, said the frozen food market remained in good health.
Chief executive Brian Young said figures from market research company Kantar Worldpanel suggest the value of the market grew stood at £5.75bn at March 30, having grown from £5.07bn at the same date in 2011.
The Kantar data shows the value of frozen-food sales grew by 2.1% in the 52 weeks to March 20, which followed rises of 4.3 per cent and 6.3 per cent in the two preceding years.
Mr Young said: "It [frozen food] tends to grow particularly well when the economy isn't doing particularly well.
"It is anti-cyclical as far as the economy is concerned, and as the economy has got better, the frozen food growth has slowed down.But what I should say is that 2.1 per cent growth year-on-year, when you look at what's happened to retail sales for Tesco, Morrisons and some of the others in the last year, the frozen-food market is still in pretty good health.
"It is doing much better than the rest of the market."
Mr Young added that the sector
chimes with moves to cut food waste, and as the message gets out that important nutritional benefits are retained when food is frozen.
He said: "Farmfoods are a switched-on business, and they have probably been quite aggressive in promoting frozen foods, which has helped them achieve quite astonishing growth rates to be perfectly honest."