Kerry Foods is latest food company in difficulties

29 March 2012

Following the sudden fall into administration of DBC Foodservice it appears that another food company has found itself in difficulties.

This time it is Kerry Foods, in Gilesgate Moor, Durham City, which has launched a consultation period with workers after a drop in profits.  They are looking to urgently cut costs and possibly close a factory.  346 jobs are at risk.  Any production will be transferred to other factories.  Kerry foods is the 3rd largest private sector employer in Durham. 

If a rescue plan fails, the business proposes to transfer production from Durham to other sites in the UK and Republic of Ireland.

A spokesman for the company said market conditions had become “highly competitive and intensely challenging”. In a pessimistic note he went on to say “While we have made significant adjustments to our cost base and have sought to win new business, to date we have not identified a plan or a strategy to restore profitability to a sustainable level,”  That is obviously worrying.

It is not clear what is happening as the company last reported profits of £24m on turnover of £576m.  However, These figures relate to the end of 2010 so not very uptodate.  Also lots of new board members were taken on at the end of last year and it has recently had a few county court judgements against it.  Looks like margins have suddenly been squeezed.  Could it have been the sudden loss of a contract with a major customer?  Seems a bit of coincidence that 2 large food suppliers have got into trouble so soon after Tesco announced its first profit warning for 20 years.

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