Mackie’s of Scotland secured its highest-ever UK market share but profits more than halved amid record increases in the cost of ingredients, haulage, feed and fertiliser that have created a "challenging and unpredictable" outlook.
The company, one of Scotland's best-known family businesses, added almost half a million customers across England, Wales and Northern Ireland according to figures from Kantar Worldpanel, hitting more than 1.4 million last year. However, profits during the year to May 2022 tumbled by 59 per cent to £1.7 million.
Mac Mackie - one of the three family owners who recently stepped into the post of executive chairman to make way for newly-appointed managing director Stuart Common - said it has been a "pivotal year" in the company's 111-year history.
He credited Mackie's growth outside its traditional Scottish market for its success in 2022 as the overall ice cream sector shrank by 7.4%. He added that the company's early adoption of renewable energy had helped it to withstand mounting cost pressures.
"We witnessed this encouraging step-change in our sales and cut-through south of the border, predominantly as a result of us winning and building on second-line listings for our honeycomb ice cream with a number of supermarkets, including Sainsbury’s," Mr Mackie said.
“For a long time, it’s been the case that our Scottish customers have been able to choose from a wide range of our ice cream flavours, but those in the rest of the UK could typically only reliably get their hands on our best-selling traditional-flavoured real dairy ice cream. We’re thrilled to be reaching new customers and determined to build on the success of these new listings.
He added: “It’s also been a very difficult year due to the scale of the cost increases we have been subject to. While this looks set to continue and worsen, we have robust plans in place to ensure the family business rides out the storm and is here to be successful for generations to come.”
READ MORE: Mackie's leaves the family fold to appoint new managing director
Revenues for the year to May 2022 came in at £17.7m, and while pre-tax profits were substantially down on the previous year's record of £4.1m, they were above last year's initial forecasts when Mackie's warned that rising costs were hampering financial returns.
The company said revenues have since rebounded due to strong sales, with the calendar year rivalling previous record levels of turnover, but profits are forecast to fall further in light of steep cost increases.
Mackie's continued to re-invest in the business during the financial year, including the culmination of £4.5m of spending on what it says is one of Europe’s most efficient and advanced low-carbon refrigeration systems.
Currently partly operational and set to be fully deployed in the coming weeks, the cooling system will slash the firm’s refrigeration-related energy usage by up to 80% along with its carbon footprint. It will enable Mackie’s to make more efficient use of its renewable energy generation capacity that includes an on-site 7,000 panel solar farm, four large-scale turbines, and a biomass plant which combined produce twice as much energy as the business uses overall.
Mackie’s has also upgraded its filling machines to significantly increase capacity, and has brought most of its sauce making in-house. Its packaging plants have been improved as well.
Mr Common said the company's sustainable investments are now paying dividends.
“Like all businesses we’re facing major challenges resulting from rising costs throughout our operations which has led to careful negotiations with our trade customers while we do our best to manage and absorb increases that may otherwise be passed on to the wider public," he said.
READ MORE: Mackies posts record profits but warns of rising costs
“Despite the restrictions associated with the pandemic, we have maintained export sales of over £2m, which includes increased export to the US, which poses an exciting opportunity for growth.
“We’ve committed to unprecedented levels of investment into our operations to make us a more efficient and sustainable business as well as being better insulated from some rising costs and position us for further future growth. 2022 saw more than £850,000 invested in plant and machinery, which included a new ice cream filler which will give us more options for new products as well as increasing our capacity as we look to continue to grow.
“I believe that our long-term strategy of doing right by the planet and investing so significantly in renewable energy is now giving us the tools to create a competitive advantage, allowing us to continue to offer shoppers a premium dairy product at what we think is an affordable price, particularly when compared to many other premium products in the market which have had to rise higher and faster.”
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