EFresh discontinues pork production
Everything Fresh Limited, EFresh, has scrapped the production of pork and its by-products at its newly acquired business, Meats Experts, citing negative returns from the slaughtering of pigs.
EFresh, which has been in the business of food distribution for some 16 years, last year acquired the St Catherine-based abattoir in an effort to add “several new products” to the EFresh line-up.
Meat Experts has its own abattoir, cutting, processing, packaging and cold-storage facilities, and logistics network.
Following the integration of the meat company into EFresh’s operation, the listed company posted overall losses of $28.8 million at the end of the June quarter.
That trajectory was maintained in the food company’s full-year results ending December 2019, which reflected losses of $56.1 million for the fourth quarter and $96.2 million for the year. The year end results are still subject to audit, but the results as they stand erase the $16 million of profit made by the company in 2018.
“Based on the negative returns from the meat processing division, the directors made the decision to discontinue the slaughtering of pigs and the related processing of pork products,” Managing Director Courtney Pullen said in the company’s just-released fourth quarter results.
The meat division, which became operational on January 1, 2019, posted a loss of $90 million for the year and in part contributed to overall losses of EFresh.
“This is mainly a result of the underutilisation of the meat processing plant as gross margins were below the break-even point. In addition to this, the price that the market demanded for pork products, in particular, made it difficult to earn sufficient margins to turn a profit,” said Pullen.
Last November 22, EFresh cut 24 jobs in the meat division in line with the downsizing of the unit.
EFresh will, however, continue the production of burgers, mince, and sausages. It’s otherwise coming to market with new products that are expected to hit grocery shelves next month.
EFresh ended the year with revenue at $2.2 billion, up 17.1 per cent over the previous year’s $1.8 billion. But while revenues grew, the administrative, selling, and distribution expenses of EFresh nearly doubled to $334.3 million.
Of that amount, 52 per cent was attributable to EFresh’s traditional distribution division. The distribution segment made a pre-tax loss of $6.2 million for the year compared to $16.3 million in profit the previous year.
Overall gross margin for EFresh was 11.5 per cent in the current year compared to 11.6 per cent in 2018. Gross margins for the traditional business was estimated at 12.2 per cent, and 7.7 per cent for the meat business.
“The pressure on margins in the traditional distribution division in the last quarter is a result of having fixed contract pricing with customers through the end of 2019. As a result, rising costs associated with stock arriving in the last quarter had a downward impact on margins,” Pullen said.