Revenues at Pladis have crumbled due to falling demand for biscuits in the wake of the pandemic and the impact the McVitie’s owner pushing through price increases.
The maker of McVitie’s, Jacob’s, Carr’s and Go Ahead saw sales fall 7% to £2bn in the year ended 31 December 2021 after a “slower than expected” post-Covid recovery, according to new accounts filed at Companies House.
Pladis blamed the majority of the decline in turnover on translating sales made by Ülker, the group’s Turkish operation, into sterling.
On a like-for-like currency basis, it said revenues grew 8.4%.
But a breakdown of revenues by region in the accounts showed the top line in the UK & Ireland slipped back from £772.2m in 2020 to £766.8m last year. This was due to the group facing tough comparisons against the lockdown period, when shoppers stocked up on biscuits.
However, sales remained comfortably above the pre-pandemic levels of £746m in 2019.
As a whole, the sweet biscuit sector in the UK saw retail sales plunge £48.4m last year – almost entirely wiping out the £48.6m gain made in 2020. This came down to 71.1 million fewer packs being sold, according to The Grocer’s annual Top Products survey. Market leader McVitie’s suffered the most, losing £29.3m on the back of a 9.5% decline in units as demand normalised.
Elsewhere, Pladis generated turnover of £621.4m in Turkey in 2021, compared with £619.9m in 2020, £149.8m in Europe, down from £160.7m, and £469.8m in the rest of the world, down from £598.4m .
Pladis said it experienced sharp increases in commodity prices. The group was also hit by “unprecedented challenges”, including problems sourcing packaging, mounting energy prices and labor shortages.
The group, formed in 2016 following the acquisition of United Biscuits by Turkey’s Yildiz Holding two years earlier, added £30m to adjusted EBITDA for the year to £334.5m.
The rise was driven by an improvement in the gross profit margin, cost controls and efficiency measures, and the acquisition of ingredients supplier Önem Gıda, bought by Ülker from Yildiz.
Operating profits also increased 20% to £217.6m as a result.
But Pladis still made a pre-tax loss of £23.9m and an overall loss of £101m, compared with pre-tax profits of £136.8m and total profits of £88.1m in 2020. The move into the red came after a £ 531.3m foreign exchange gain on investment activities during the year was dwarfed by a £768.7m foreign exchange loss on borrowings.
Net debt at the group also rose from £1bn to £1.3bn by the end of the year due to the Önem and impact of currency headwinds.
“We are continuing to see an adverse impact of Covid-19 with demand and supply fluctuation creating a mix of challenges for the industry – from shipping disruptions, to the short supply of packaging and an increase in the cost of our key ingredients,” a Pladis spokesperson said.
“Combined with other global issues, such as mounting energy prices, it has presented unprecedented challenges.
“As a market leader in biscuits, we’re confident we’re taking the right steps to secure product supply despite the very challenging context to ensure our consumers continue to have access to and enjoy our biscuits, chocolate and snacks.”