Convenience foods group Uniq said today it was considering the closure of two UK factories as part of a shake-up at its dessert-making division.
The moves to cease production at Newton Abbot, Devon, and Evercreech in Wiltshire come after Uniq acquired a Shropshire-based dairy products business from Northern Foods earlier this month.
Around 550 people work at the two sites, which are likely to close over the next two years.
Uniq also reported annual losses of £15.6m (€23.3m) today – compared with profits of £16.7m (€24.9m) last year – as the impact of restructuring and the sale of businesses took its toll on figures for the year to March 31.
The company, which has sold brands including Utterly Butterly and Vitalite as part of a pan-European focus on desserts, ready meals and sandwiches, added that UK market conditions had become increasingly difficult.
But chief executive Bill Ronald said recent changes, including the sale of a poultry business, had left the UK division better placed to cope.
He added: “This has been a year of significant progress in a very tough retail environment. While I am confident of our long-term performance, the start of the new financial year will be extremely challenging.”
The company said operating profits from continuing businesses grew 46% to £39.5m (€59m), a result largely due to a strong first half of the year in the UK and a continuing strong performance in France.
In the second half, Uniq saw higher raw material costs while the UK market has also become more competitive as a result of supermarket consolidation.
Progress has also been held back by the loss of some contracts, including £5m (€7.5m) of dips business with Sainsbury’s in the new financial year. The company, which has eight sites in the UK, is still the largest supplier of sandwiches to Marks & Spencer and has a range of contracts with Asda.
The proposed changes in the desserts business will affect 400 staff at Evercreech and 150 at Newton Abbot. Work is likely to be transferred to the company’s larger site at Paignton, as well as the recently-acquired operation at Minsterley, Shropshire.