Food packaging specialist Faerch Durham has managed to dramatically boost operating profits despite facing cost increases.
The North East operation of the Danish packaging group saw a near 150% increase in operating profit to £9.8m in 2022 on the back of a 38% increase in turnover to £160.26m. Accounts for the Dragonville Industrial Estate factory - which makes rigid plastic food packaging such as microwave meal containers and fresh meat packs - show production staff numbers grew considerably between between 2021 and last year though its number of administration staff nearly halved.
While overall headcount reached 528, up from 508 in 2021, Faerch reduced its wage bill from £16.4m to £14.7m, and significantly slashed costs associated with operating lease rentals of buildings in land - cutting that figure from £4.4m to £2.8m.
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Earlier this year, and since the end of the accounts period, Tesco announced it had begun recycling used plastic food trays back into packaging via Faerch's 'Tray to Tray' programme. It sees PET trays placed in recycling bins by people in the EU, collected and converted back into food grade trays used for the supermarket's own brand chilled ready meals.
Tesco said the partnership would ensure that high quality food-grade PET is kept within the supply chain, rather than being "downcycled" - a term used to describe the production of products lower in value than the original item. In April, Faerch 海角视频's strategic sales manager Ruth Price said it was the firm's intention not only to increase the level of tray-to-tray content - currently about 30% - but also to take material from the 海角视频 for recycling.
Writing in a review attached to the accounts, director Tom Sand-Kristensen, said: "In 2022, the group managed to grow sales volumes organically in all our markets. However, our margins year on year were negatively impacted by the cost increases in materials, energy, packaging and labour.
"Part of these price increases were passed on to customers either through contractual pass-through mechanisms or through discretionary price increases for non-contracted customers. Faerch's strategic focus is to make food packaging circular, where food trays are made from recycled material that, after use, can be recycled into new food grade products of the same quality.
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"The turmoil in the raw material markets and the global supply chain challenges experienced since 2021, continued to cause inflationary pressures. However, this has started to stabilise in 2023 while Faerch's underlying business and pipeline remains strong."
The majority of Faerch Durham's turnover is derived in the 海角视频 - around £155.8m - with £4.4m coming from Europe and elsewhere.