Somerdale sales grow but profit drops
Somerdale said its sales grew strongly in key global markets, especially North America. However, despite this growth, net profitability fell as a result of adverse currency fluctuations requiring fair value, non-cash, adjustments to be made at the year-end.
While in the current financial year, the business is continuing to perform well at a financial, commercial and operational level. Further added-value sales growth is being experienced in established and emerging markets, in part generated by the launch of a range of new branded products.
Turnover increased by £8.7m ($11.2m) to £38.4m ($49.3m); approximately 99% of turnover was generated through export activity.
Somerdale’s sales in the US and Canada continued to grow and passed the £15m ($19.3m) sales barrier with revenues having increased by more than 50% in the last five years.
The company exported more than 1,500 tonnes of cheese through about 3,000 retail and foodservice outlets located across the US and Canada. Somerdale’s sales now represent about 17.5% of all UK cheese exports to the US, with around half being under the Somerdale brand.
Profit before tax was £192,155 ($246,807), compared to £482,555 ($620,187) in 2018.
Somerdale said net profit decreased as a result of adverse currency fluctuations. These led to fair value, non-cash adjustments being made at the year-end to reflect the revaluation of foreign currency contracts.
The financial strength of the business continues to improve following the share buyback undertaken in 2016, the company said. Total net assets have increased to more than £1m ($1.28m) and current assets have improved by £108,000 ($138,700) from the last year end.
During the year, bank loans and invoice discounting facility were both refinanced, creating additional liquidity and providing funding to develop new markets.
Trevor Debenham, finance director of Somerdale International, said, “Overall, the business performed satisfactorily and we achieved our core objective of generating strong sales growth while at the same time maintaining our margins. Although net profit was impacted by adverse currency fluctuations, the underlying financial and commercial fundamentals of the business were reinforced during the year and leave us well positioned to grow profitability moving forward.
“Somerdale’s turnover has increased by over 45% in the last five years and we have an ambitious plan in place to grow our sales further on a sustainable and profitable basis. In doing so, we will continue to work closely with our customers, distributors and suppliers to build our presence in established and emerging markets and launch innovative, added-value products. Indeed, in the light of this it is pleasing to be able to report that in the current year to date we are experiencing further strong sales growth.”
