Exceptional costs of £3m hurt profits at Baxters

Deputy Business Editor

Saturday 2 March 2013

BAXTERS has seen its pre-tax profits fall from £7.1 million to £4.6m due to almost £3m of exceptional costs including charges related to the acquisition of canned meat pie brand Fray Bentos.

UPBEAT: Chairman Audrey Baxter said all markets but one reported a rise in revenue. Picture: Gordon Terris

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Greig Cameron Deputy Business Editor

Accounts for W.A Baxter & Sons (Holdings) – the parent company of Baxters Food Group – show turnover increased 9% from £125.8m to £136.8m in the 12 months to June 2, 2012, with income rising in all markets except Canada.

The company, based in Fochabers, Moray, said the "modest backward move" in Canada was affected by the ending of an armed forces contract and a separate private label deal.International turnover dipped from £51.4m to £49.3m, with UK sales rising from £74.5m to £87.5m.On an operating level, profits increased from £8m to £8.9m but Baxters set out exceptional charges for an additional £1.5m of marketing spend that was "significantly" above normal levels.In addition there was almost £850,000 relating to the Fray Bentos deal, £329,000 of further one-off charges and £295,000 relating to employee costs.Chairman Audrey Baxter said: "These figures reflect a busy and positive year in all of our operations despite the challenging trading environments. "All markets reported a rise in revenue performance with the exception of Canada. As underlying sales in Canada remain strong we are confident we will reverse this slight decline during the next 12 months. This year's results are significantly affected due to the exceptional charges we have absorbed during the acquisition of Fray Bentos and exceptional marketing spend. We will continue to incur transition costs relating to this acquisition into the current financial year."Like many others in the food sector, we continue to absorb rises in the costs of goods and, in particular, costs of sales through additional trade spend. It is anticipated that these pressures will continue to affect margins for the foreseeable future."Total capital expenditure across the year was £21.5m, with £4.1m of that to acquire tangible assets and £17.4m on intangible assets.The company – which can trace its roots back to 1868 and is most famous for its jams and soups – drew down a new £18.5m bank loan during the year, which sent net debt soaring from £20.6m to £38.3m.Average employee numbers dipped from 937 to 908 although staff costs crept up £24.6m to £25.8m.The accounts filed at Companies House said a £1.5m final dividend would be recommended to shareholders at the company's annual general meeting.Directors' emoluments rose from £889,000 to more than £1m, with the highest paid seeing their rewards go from £480,000 to £590,000. Ms Baxter said: "The board remain very confident we have a strong plan for growth and the capabilities to execute that plan."She added the company had no links with suppliers involved in the recent horsemeat scandal but that it was undertaking tests on its beef and game products in line with directives from the Food Standards Agency. Ms Baxter said: "We can confirm we comply to all industry standards and FSA guidelines in relation to the sourcing of our raw materials and carry out regular quality assurance tests on our products."Earlier this week Baxters bought a vinegar manufacturing plant in Staffordshire.Gordon Baxter, one of the driving forces behind the growth of the business before passing it on to daughter Audrey in 1992, died last month at the age of 95.

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Exceptional costs of £3m hurt profits at Baxters

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