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Walkers announce 70 per cent profit rise but concerns for next year





Walkers have recorded a good profit rise
Walkers have recorded a good profit rise

The workforce at Walkers Shortbread’s newest factory is set to double next year despite company officials fearing the outlook for 2014 is not encouraging.

Another 20 employees could be taken on at the 3,500 square metres site in Fisherton, Aberlour, to help improve capacity and efficiency.

More machines are set to be installed as part of the £7 million investment before the venue is fully operational next year.

It comes as new accounts for the Moray-based company, lodged with Companies House, show an operating profit spike from £8.619 million in 2011 to £14.603 million last year — a rise of 69.4 per cent.

Profit after tax jumped 69.5 per cent from £6.478 million to £10.981 million.

The figures were welcomed after several years of margin erosion and came as the company enjoyed growth in exports to above £50 million for the first time, with products available in 90 countries and accounting for approximately 41 per cent of sales in both 2012 and 2011.

Walkers’ turnover has more than doubled over the past 10 years to £123.7 million — up 3.8 per cent on £119.1 million in 2011 — and the Christmas demand has seen seasonal workers boost staff levels to a record high of 1,650 with the company at its manufacturing peak.

But joint managing director Jim Walker, who stressed the "significant contribution" employment levels made to the local economy, expects profit to slip this year and next due to food and raw material inflation, plus exports being affected by changes in the strength of the pound.

"It will be squeezed this year and next year," he said.

"It won’t be down as far as 2011 figures but will be down a bit. We won’t be doing too bad, but we will be under pressure for a few years if things like commodity prices stay high.

"We are hoping we will be able to hold our own, but it might make growth more difficult and might mean a flat year. This year I think we are in good shape, but next year will be more challenging, I’m sure."

He continued: "Limiting the effects of food and raw material inflation, whilst maintaining the quality of the ingredients we source, remains at the top of our agenda.

"This continues to present the business with very real challenges and although 2012 saw a temporary easing of pressures in the dairy sector, the price of other commodities has continued to rise.

"In recent months the business has started to face a number of significant cost pressures, particularly in the dairy sector, and this will adversely impact the returns generated in the current year. Further cost increases are also expected as we move forward and the outlook for 2014 is not encouraging.

"Over the past few years the export size of the business has benefitted from the underlying weakness of sterling. However, in recent months, we have become very concerned with its appreciation which, if maintained, will squeeze margins and affect growth."

The new factory could help matters, particularly with it enabling increased production of biscuits and other treats.

"We are very tight for capacity and looking long term this will solve one or two problems," commented Mr Walker, who thought it had the potential to become an "invaluable" asset. "It will take two or three years to get up to full production capacity but we need it.

"It will relieve some bottle necks and will give us a bit more capacity in shortbread too, which is important for us."

Despite concerns Mr Walker is confident the reputation of products will help safeguard it.

"We are pretty solid and in a strong enough position to maintain employment and keep the company going," he added.

"We are satisfied with the level of growth being achieved in the current year, particularly when bearing in mind the fragile economic recovery now underway in the UK and difficulties faced by many of the countries to which we export."

The accounts, to 31st December 2012, show rewards for directors fell to £2.995 million from £3.048 million 12 months earlier, although remuneration for the highest paid director increased from £959,000 to £980,000.

Meanwhile, charitable donations almost doubled from £36,503 in 2011 to £69,435 last year.


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