Uniq suffers as shoppers trade down

Struggling M&S food supplier Uniq has revealed increased half-year losses

Struggling M&S food supplier Uniq has revealed increased half-year losses as cash-strapped consumers continue to cut back on expensive treats.

Shares plunged more than 12% after the group posted a pre-tax loss from continuing operations of £12.8 million for the six months to June 30, up from a £2.6 million deficit a year earlier.

Uniq, which supplies sandwiches, ready meals and desserts to grocery giants and airline caterers, said pressure from consumers trading down "has not abated" in the past six months.

The company previously admitted that its UK operations have suffered due to a reliance on premium ranges, which have been hit by falling demand in the recession.

The results come as Uniq conducts a major restructuring, including offloading its European sites to focus on its loss-making UK operations.

Operating losses at its domestic arm narrowed to £500,000 during the period from £1.8 million a year earlier as sales declines eased from 4.2% in the second half of 2008 to 1.6%. Sales at its desserts business were flat year on year, compared with falls in 2008, and the firm said the proposed closure of its Paignton factory, in Devon, should provide £11 million in annual cost savings. Group revenues from continuing operations fell to £141.1 million from £143.4 million.

The UK arm returned to profit in 2007 but this was reversed by economic conditions and operational problems at its desserts plant at Evercreech, Somerset. Uniq also has a sandwich and wraps factory at Northampton and a further desserts operation at Minsterley, Shropshire.

Uniq said a further £15 million of new sandwich business from M&S will begin in coming months, while a £12 million deal to supply additional salads to Co-operative supermarkets will begin at the end of the year.

It added that its northern European operations banked profits of £2.6 million for the period, the division's first surplus in three years, amid improved trading in the Netherlands and Poland.

Uniq chief executive Geoff Eaton said: "We set ourselves a challenging agenda for 2009 and I am very pleased with our progress. I believe we are on track to complete the transformation of the group to a UK focussed business by the end of the year and remain confident that we can deliver results in line with our expectations."