Poultry and ready meals giant 2 Sisters Food Group said profits were also eroded by its purchase of loss-making chicken, beef and lamb operations from Dutch food group VION, as well as currency swings and higher ingredient prices.
The Birmingham-based group, owned by entrepreneur Ranjit Singh Boparan, reported losses of £33.5 million in the year to the end of July after exceptional items, interest and tax. That compared with profits of £42.5 million a year earlier.
Like-for-like sales grew 5.6% to £2.4 billion. Including acquisitions, total sales surged 23.3% to £2.9 billion, as the group consolidated its position as one of Britain's biggest food producers.
2 Sisters has been on a debt-fuelled growth spurt since buying Yorkshire-based Goodfella's pizza maker Northern Foods for £342 million in 2011.
But it said the market saw ready meal sales plunge by as much as 40% when the horsemeat scandal emerged early this year, after traces of horse DNA were found in frozen beefburgers sold in Tesco, Iceland, Aldi and Lidl.
That hurt sales in its chilled food division, which makes ready meals for chains including Marks & Spencer, even though no traces of horsemeat were found in its products.
2 Sisters warned harsh conditions are set to continue as the ready meals market recovers slowly and household budgets remain under pressure.
It continues to close plants to slash costs, and shut a factory in Leicester in June and earlier this month announced the closure of a roast chicken site in Suffolk, with 750 jobs going in total.
Mr Boparan said: "Trading conditions have been very tough with inflation impacting cash-squeezed consumers and the impact of the horsemeat scandal on the food sector.
"We expect the economic environment to remain tough and we will work with our customers to deliver quality and value to consumers, invest in our brands, in innovation and our people, and improve efficiency."
The group is launching about 100 new traditional meals, ranging from roast beef to chilli con carne, to rebuild the ready meals sector.
And it said it aims to return the Vion business, which earned sales of £365 million under its 20 weeks of ownership, to profit next year.