Food group Princes says “extraordinary inflationary pressures” pushed it into the red in its latest accounts - but the Napolina and Olivio owner that’s the subject of takeover speculation says it is already seeing “significant improvements” after a year that also saw it shed jobs.
Princes Foods has been put up for sale by its Japanese owner Mitsubishi, with potential buyers reportedly including a private equity house and an Italian food business.
In its latest accounts for the year to March 31, 2023, Princes reported revenues of £1.74bn, up from £1.44bn in 2022. But it reported a pre-tax loss of £50.7m in 2023, compared to a profit of £28.9m in 2022. Total employee numbers fell from 6,977 in 2022 to 6,734 in 2023, which the group put down to “redundancies in the year”.
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Princes, based in Liverpool's famous Royal Liver Building, blamed inflation for hitting its margins - but its managing director Cameron Mackintosh said the outlook for the business remained positive.
He said: “In the 2022/23 financial year, the Group reported a profit before tax excluding restructuring and impairment charges of £7.2m, primarily driven by extraordinary inflationary pressures resulting in increased direct material and operational costs reducing the gross profit percentage from 17.6% to 15.3% coupled with inflation increasing overheads and higher interest costs during the period.
“Despite another challenging year for the food and drink industry, Princes Group remained resilient, continuing to adapt, transform and make important strides towards our targets.
“From further investment in the development of our brands, through to advancing our social sustainability approaches and progressing the Group’s inclusion and diversity strategy, Princes is constantly evolving to meet the changing needs of our colleagues, customers and consumers – ensuring we are well-positioned for growth in FY23/24.
“Since the end of the reported financial year in March, we have seen significant improvements in our financial performance, and we want to build on this progress into next year.”
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As well as its own brand ranges including Princes tinned fish and Crosse & Blackwell soups, the group also makes products including Batchelors tinned peas, Branston baked beans, and Flora-branded sunflower oil.
The group's annual report said its operations team had completed long-term investment programmes at its manufacturing sites in Cardiff and at Sutton and Erith in London, “adding capacity and capability”.
Over the financial year the company said it had received two government grants. It received a £4.2m grant from the Italian government to help cover the increase in energy costs. It also received £2m from the Welsh Government, following £1m the previous year, to support a £60m investment in its Cardiff soft drinks factory that helped to create 130 jobs.
Princes was put on the market last year. Italian group Newlat Food has confirmed that it is bidding, while the second bidder .
In December, : “Following the articles published in recent days by major English media outlets and picked up this morning by “Il Sole 24 Ore” and “Corriere della Sera,” Newlat Food confirms its participation in the competitive process for the sale of the historic English food group Princes Limited. The company also confirms that the negotiation is currently in a very advanced stage.
“The chairman, Angelo Mastrolia, and the entire management team are committed to seizing a great strategic opportunity capable of creating value for all stakeholders of the group.”
BusinessLive has approached Newlat for an update.
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Epiris’ website says the group: “aim to transform businesses in partnership with exceptional management teams. Our approach is to focus on strategic clarity, operational excellence, growth acceleration and M&A.”
Its existing investments include auction house Bonhams and restaurant group The Big Table, which own Bella Italia, Las Iguanas and Café Rouge. Epiris declined to comment on the reports linking it with Princes.
A Princes spokesperson said: “Princes does not respond to market speculation suffice to say that in the normal course of business, we routinely seek to identify growth and investment strategies. No decisions have been taken.”