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Uniq heads for loss as shoppers turn to cheap food
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08/10/2008
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British shoppers are turning to cheaper foods, and that will mean losses for chilled convenience food group Uniq, the company said in a third quarter trading update today.
Uniq announced that since its last update in July, it had seen further significant deterioration in economic conditions, particularly in the UK and France. Consumer had responded to these conditions by turning to lower added value products and channels, and towards price discounted products, it said. This had led to a disappointing profit margins although sales for the third quarter to the end of September were in line with last year.
Sales growth in sandwiches slowed significantly from 13.1% in the first half to 2.1% in the third quarter and while sales in desserts stabilised this was at a cost to margin.
Across the UK business as a whole the positive impact of price increases achieved in quarter three has been offset by the adverse mix and the need to drive volume through price discounting. Despite these pressures Uniq said it expected the UK to deliver a trading profit in the second half, albeit at a much lower level than last year, and still dependent on Christmas.
In the Netherlands, salad sales were flat following the decline of 9.7% in the first half. In Germany, sales declined by 2.0% after a flat performance in the first half, reflecting a weak fish market. Strong growth in Poland has continued at 24.4% in the quarter. The improving trend in The Netherlands means that second half performance in Northern Europe is expected to be an improvement on last year.
The decline of the French market worsened significantly in the third quarter and sales reduced by 6.8%. The decline in our sales is more heavily skewed to branded rather than own label products, resulting in an adverse margin mix.
Uniq said it expected negative market trends to continue and, as a consequence, it now anticipated a trading loss in the second half as a whole. Pictured: Uniq Chief Executive Geoff Eaton
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Author
Ken Hurst
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