Uniq on the road to recovery

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Manufacturing News, Source : TheManufacturer.com
Published : 26 Mar 2007 11:31
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European chilled convenience food group Uniq said today it had “set out to achieve a great deal in 2006” and outlined some of the challenges it had faced.

Chief executive Geoff Eaton said the group was largely on schedule with plans to unlock the true potential of Uniq.

In the UK, he said, Uniq had been making substantial losses, had lost touch with its customers, and had a particularly big challenge to sort out its desserts business. There were mounting operating losses in Germany; a fast-declining frozen business in need of radical treatment in France; and two legacy issues to contend with: the main UK pension deficit and the onerous element of a contract with logistics operator Wincanton, both of which were inherited from Unigate. The combination of all these factors resulted in an adverse cash flow which was pushing the group to the limit of its bank facilities which were due for renewal in 2006.

“We therefore faced three major risks as a group: operational turnaround in all divisions; the UK pension deficit; and rising bank indebtedness,” Eaton said.

Having put a new management team in place, Uniq entered the first phase of its recovery plan by selling its two most profitable businesses to satisfy its bankers on the back of a strong mergers and acquisitions market. The Belgian salads business was sold for £40 million in November and the French spreads business for £248 million in January. This completed the first phase of our recovery plan with a result that exceeded our expectations.

For the twelve months ended 31 December sales were £712.6 million and the operating loss was £10.8 million. This compared with sales of £717.8 million and an operating loss of £11.1 million in the previous twelve months ended 31 December 2005.

In the UK, Eaton said Uniq had successfully decentralised into six business units, was fixing its relationships with customers, and delivered a price increase in desserts following five years of zero increases.

New transport arrangements had been made with NFT and Culina, as a result of which Uniq will cease using Wincanton’s Gloucester distribution warehouse in April 2007. Meanwhile, it is in discussions with Wincanton about mutual obligations under the warehousing contract which expires in March 2009.

Looking forward, Eaton said the significant actions taken over the last year will deliver benefits in 2007.

“The UK recovery will be led by Minsterley which is anticipated to get to a break-even run-rate by the end of the year. The rest of the UK will be impacted in the first half by the recent pressure on margins. However, we expect the run rate in the second half of the year to be much improved. The most recent evidence would suggest that the actions taken in Northern Europe are just starting to turn around performance, but Germany will constrain the pace of recovery. In France both the re-launch of the Marie brand and the restructuring of the business are continuing in line with our plan and we anticipate the recovery will pick up from the second quarter, boosted by increased marketing investment. We therefore remain confident of achieving significant margin improvement in 2007, although much of this will come in the second half.”