Scale of Five Star losses revealed
FIVE Star Fish, the seafood business which is threatening to close its Grimsby site with a potential loss of almost 400 jobs, has reported a significant increase in its losses despite a large rise in turnover.
The secondary white fish processor is a wholly owned subsidiary of Boparan Holdings, which deals mainly in poultry under the 2Sisters Food group name.
The latest figures from Companies House show that Five Star made a loss of £17.2 million for the year to July 29, 2017, compared with a loss of £6.5 million for the previous year.
This was in spite of a near £6.5 million or 10.7 per cent rise in turnover to £57.521 million after it won a major Marks & Spencer coated fish contract from Grimsby rivals Seachill two years ago.
‘The current period result includes restructuring costs of £14,633,000 (2016: loss of £6,505,000),’ the company’s accounts report says.
Two months ago, Five Star announced that the losses from its Grimsby site were financially unsustainable and warned that closure was under consideration.
Young’s Seafood is widely reported to be taking over the M&S coated business and is increasing the size of its Grimsby workforce accordingly.
Five Star said the pre-restructuring operating loss increased by 20.5 per cent as a result of higher administration and distribution costs.
It also says that its main customers are the UK’s leading supermarkets and their strength, combined with competitive pressure within the industry, represents continuing risks, which could result in lost sales to key competitors, impacting on revenue and profits.
The sharply rising cost of fish, which is affecting all seafood processors in the UK, seems to be behind some of the company’s problems.
Under the heading of Principal Risks and Uncertainties, the report says: ‘The company is exposed to the risks of commodity inflation, whereby the fluctuations in the price of significant components cannot be passed onto the end customer within a reasonable timeframe, affecting profitability.
‘To mitigate this risk, the company has a strong procurement team to focus on purchase prices and investment in productivity enhancements across its sites.’
Five Star began a 45-day consultation with staff in Grimsby last month over the potential closure of the site.
‘This consultation period has not yet concluded and, as a result, the future prospects of the company are uncertain,’ the report adds.