UK cold storage and warehousing firm Norish plc (LON:NSH) revealed a somewhat uncertain Brexit outlook, though it told investors it was “well positioned to benefit from any disruption”.
“It is difficult to pinpoint any direct impacts from the ongoing Brexit discussions other than to say they are hardly positive for business generally,” Norish chairman Ted O’Neill said.
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“However, our balance sheet is in excellent shape and leaves us well positioned to benefit from any disruption and consequent opportunity which may arise.”
Norish today released financial results for 2018 revealing a pre-tax profit of £1.94mln, up 17.6% from 2017, on revenue of £36.8mln which was down 12.4% from the preceding year.
Net debt reduced to £4.9mln at year end, down from £5.4mln. It increased the dividend by 9% to 1.80 Euro cents per share.
Performance
The company noted that the cold storage operation - which represents around three-quarters of the group’s business – saw a 4% reduction in sales with the company noted a drop in blast freezing activity.
It added that the cold storage business had lower intake, lower stock turn and higher storage revenues.
Costs were, however, reduced at the site level and more than offset the drop in revenue – labour costs were down 5% while power costs were down by 10% due to the reduced blast freezing activities.
Norish also noted that market conditions for its sourcing division caused a reduction in protein supply and the unit’s sales reduced by 17%.
The group’s dairy unit, meanwhile, showed “underlying progress”, with milk deliveries up 18%.
It also decided during the year to discontinue its juice business.
Outlook for 2019
In terms of its outlook, the company said: “We anticipate another year of strong profit growth for the group in 2019.
“In our cold store division, the year has got off to a strong start in the first two months of the year.
“Management continues to focus on maximising both sales mix and pricing, in a market that is currently more favourable to cold storage businesses, than it has been at any time in the most recent past.”
“The UK frozen food sector is currently the fastest growing retail category, growing at 4% per annum.
“A combination of factors is driving this growth including growth in online shopping premiumisation of the category, as well as providing a solution to food waste. This growth comes against a background of a cold store market which has seen a lack of significant investment over an extended number of years.”