POTATO supplier Producer Investments has found itself in hot water after profits more than halved in the first half, hurt by the supermarket price wars and a bigger-than-expected crop last summer.
The Scottish company, which produces and supplies retailers, including Tesco, Sainsbury’s and Waitrose, with spuds as well as daffodils, said operating profits fell to £2.51m in the 26 weeks to 27 December from £5.78m the same time the previous year.
Revenue also declined by 9.9 per cent to £80.7m. However, it treated investors to an interim dividend of 2.39p – up five per cent on last year.
“The marketplace has been hugely challenging. We are predominantly big suppliers to two of the big four retailers and they have found their space being invaded by the discounters. All that activity has led to a lot of price reduction,” chief executive Angus Armstrong said.
He added that it will also be scaling back its production after a big crop last summer resulted in the market being oversupplied and caused prices to fall.
“We are cutting some of our growing back and we are more confident about having a more balanced market going ahead in this current summer,” he said.
The company, which trades under its Greenvale brand, bought one of the biggest growers of Jersey Royals last year for £15m, helping to broaden its reach and sell to a wider range of customers.
Angus said that while the market would remain tough, the Jersey Royal acquisition, together with a strong daffodil season and adjustments to its crops, meant it was “well-positioned” to grow.