ENTREPRENEUR Simon Howie has highlighted the challenges posed by the fall in the pound since the Brexit vote in 2016 as his butchery business recorded a drop in annual profits.

The latest accounts for Simon Howie Butchers filed at Companies House show the firm made £1.9m pre tax profit in 2017 compared with £2.7m in the preceding period.

Sales rose to £15.8 million from £15.4m. The accounts note the firm’s customers include the big six supermarkets and many of Scotland’s top hotels and restaurants.

Read more: Simon Howie planning to double his butcher sales

Mr Howie said the fall in profits partly reflected the significant increase in raw material costs the business has faced in the last two years following the fall in the pound.

“The export of Scotch meat is much greater,“ noted Mr Howie, adding: “If you look at a lot of our cuts there is a lot of international competition for that meat and we are having to pay for it.”

The increase in the price of imported meat has stoked competition for domestic produce as well.

Mr Howie noted labour costs had also increased. The firm has put wages up to help employees cope with the inflationary pressures that have been stoked by the fall in the pound.

It employs around 115 people in its processing plant on Findony Farm in Perthshire and two shops in the local area.

The cost of inputs such as packaging has also increased.

But the business faces challenges trying to increase the prices charged to supermarkets, although these seem to recognise the importance of maintaining a healthy supplier base.

“We are not hitting a brick wall but discussions about price increases are never straightforward,” said Mr Howie, who reckons supermarkets are probably having similar talks with other suppliers.

Read more: I'm fighting hard to keep prices down following collapse of sterling

He noted that many of his firm’s customers are hotels and restaurants owned by entrepreneurs, who don’t enjoy price increases.

The company’s profitability remains respectable but not where Mr Howie would like it to be.

The group has retained profits to invest in operational improvements to help maintain margins. It invested £3m in new packaging and food processing equipment and buildings during the year.

It finished the year in what directors described as a good financial position.

Mr Howie established the butchery business in 1986 before branching out into other activities including the production of laminates used in his shops.

He cemented his standing as one of Scotland’s most successful entrepreneurs in December when he sold the Shore Laminates and Mermaid Panels businesses to Texas-based Wilsonart Engineered Surfaces for £30m.

Read more: Laminated panels firm born in a butcher shop

In February Mr Howie sold Thrislington Cubicles, a designer and manufacturer of products such as toilet cubicles and vanity units, to Hollywood-based Bobrick Washroom Equipment in what was thought to be a multi-million deal.

“I’m still very passionate about farming. I’ve been putting lots of effort into agriculture,” said Mr Howie yesterday, while noting he has interests in a range of other sectors.

Mr Howie expanded his commercial property portfolio recently with a deal to acquire a former Tesco distribution centre by the M8 in West Lothian.

The commercial property arm is about to develop a 16 acre industrial site in Perth.

The Calport shipping and handling business in Perth is pushing hard to expand.

Mr Howie still hopes to proceed with a longstanding plan to develop a waste to energy plant at Carnbroe in Lanarkshire, which he said is going through the Scottish Government appeals process.

This has faced opposition from locals.

Mr Howie sold the Shore Recycling business to Viridor for £23m in 2008. This was founded by Mr Howie to deal with discarded fridges using smart technology from Germany.

In the accounts for Simon Howie Butchers the company said the directors considered the financial position of the company was healthy at the year end and short term prospects remained positive.