Uniq pins recovery on European sell-offs

Convenience food group Uniq has said it will sell two continental manufacturing units to refocus its business strategy, after admitting yesterday it is struggling to keep abreast of the prepared foods market.

The British firm, which has just announced an 80 per cent drop in year-end profits, will offload its French spreads business and Belgian salad operation. Collectively the businesses account for 12 per cent of total group revenues.

The manufacturer is hoping to raise £200m (€290.7m) from the divestures, with most of the proceeds directed to reduce the borrowing deficit of £96m and plug the UK pension fund hole of £97m.

Chief executive Geoff Eaton said the company had paid the price of not keeping in close touch with its key customers and failing to move at the pace required to succeed in the challenging convenience food market.

The divestures will form part of a recovery programme started late last year to rescue the ailing firm and refocus its efforts on the lucrative European ready-meal market.

Uniq currently supplies ready-meals to Tesco, Asda and Marks and Spencer in the UK, and to leading European retailers across Holland, Germany and Poland.

"Part of Uniq's problems can be attributed to the challenges of seeking to develop too many disparate businesses. We have therefore decided to focus on a smaller number of convenience foods businesses which we judge to have the highest potential for significant profit growth," the company said in a statement.

The firm saw operating profit tumble 52 per cent, which together with a higher interest expense meant pre-tax profits before significant items plummeted 80 per cent to £4.6m for the year ending 31 March 2006.

Revenue fell to £825.1m from £879m in 2005.

Looking forward, Uniq hopes for significant recovery in its UK performance this coming year, highlighting gains made in cost reductions and price increases in the second half of last year that have better positioned the company.