Rising costs hit Macphie despite tasty sales figures

The Stonehaven-based food company, which supplies the glaze for sausage rolls at bakery chain Greggs, among a range of contracts, admitted that its full-year results had fallen short of its board’s expectations.

Chief executive and majority shareholder Alastair Macphie said sugar prices had risen by 40 per cent over the past year, while butter prices have doubled since 2007.

“We are caught between the pincers of raw material price increases imposed on us by suppliers and the time delay or resistance in passing these on to the retailers and food service customers,” he said. “Therein lies the challenge.”

The firm made its foray into the retail market last year by selling its DeviliShh brand of desserts directly to consumers. The products are being sold at 233 Waitrose supermarkets.

Macphie added: “We do not anticipate 2012 to be in any way easy, but we will continue to strengthen our market position through new product innovation and improving our communication to customers.

“Despite difficult market conditions, we are seeing an encouraging sales trend, we have a resilient balance sheet and very low borrowings.”

Accounts filed at Companies House show operating profits fell to £1.4 million in the year to 31 March from £2m in the previous 12 months, despite sales edging up to £44.7m from £41.8m.

The company’s pre-tax profits slid to £332,952 from £958,082 after the firm wrote off a further £1m of goodwill relating to the takeover of Strathoak Holdings in 2000.

Macphie said that the results had also been affected by a “significant investment” to upgrade the company’s ultra heat treatment (UHT) plant, but that the service levels at the facility were now back to normal.

Increased spending on product development and marketing also ate into the bottom line.

In October, the firm won a slice of £7m funding from the UK government’s Technology Strategy Board to look at how it can use soundwaves in cooking.

The accounts are the final set to include a contribution from Glenbervie Aberdeen Angus (GAA), a butchery joint venture set up with Broxburn-based beef processor AK Stoddart, which closed in September.

Stoddart wound up the joint venture in September so it could take the meat processing in-house. Managers offered to redeploy the ten staff from GAA into other parts of the group, with some choosing to take up roles and others leaving the business.

Macphie said the facilities vacated by GAA would be used to expand its ingredients business.

The company cut its pension fund deficit to £1.5m from £2.1m and is currently consulting members over closing its final-salary scheme.

The highest-paid director’s remuneration package edged up to £179,432 from £178,109, while the company’s headcount dipped to 276 from 283.