Bernard Matthews in a flap with job cuts and late payments to suppliers
Concerns are growing for the financial strength of Bernard Matthews, Europe’s biggest turkey producer, after the company delayed payments to suppliers and told staff that it did not have the funds to settle redundancy payments in one sum.
The struggling poultry supplier is also understood to be exploring selling off land to raise cash and is in discussions with asset-backed financiers at Wells Fargo to raise money to strengthen its balance sheet.
This month, the company made 30 of its 2,000 staff redundant and has told staff that they can only receive statutory redundancy pay, instead of a week’s pay for every year served, according to a source.
It is understood that some payments to suppliers are outstanding, beyond their contract terms, including Cardinal Security, which is owed £200,000. The Government’s Prompt Payment Code recommends suppliers are paid within a maximum of 90 days.
The Norfolk-based turkey breeder has been loss-making for the past eight years as it has attempted to recover from the damage wrought by a severe avian flu outbreak in 2007, which led to thousands of its birds being destroyed.
An attack on its Turkey Twizzlers product by celebrity chef Jamie Oliver also hit sales.
Turnover at Bernard Matthews fell by £30m last year to £276m, although pre-tax losses after exceptional costs narrowed to £5.2m. “Bernard Matthews is a sound, well-run company and it’s very much business as usual for the organisation.” said a Bernard Matthews spokesperson.
Rutland Partners, which saved the company in 2013 with a £25m injection, was the first outside investor in its history.
Founder Bernard Matthews died in 2010.
The company shot to prominence under late founder Bernard Matthews’ high profile “bootiful” advertising campaign in the 1980s, which turned it into a household name
Bernard Matthews’s poultry rival 2 Sisters, which is run by so-called “Chicken King” Ranjit Boparan, is also facing a torrid time after posting a 66pc jump in operating losses to £36.3m last year as sales edged lower to £944.7m from £992.7m the year before.
The company said that it was continuing to feel the effects of the bird flu outbreak and “negative consumer sentiment following the Foods Standards Authority campylobacter reporting and the impact of food deflation” last year as supermarkets slashed food prices.
Mr Boparan is currently exploring a sale of his Fox’s Biscuits brand to rival Burton Biscuits owner Ontario Teachers’ Pension Fund.
There has been speculation that talks between Boparan and the Canadian fund had run aground but a source said last week that negotiations were still ongoing but taking longer than expected.
The Indian tycoon’s investment company, Boparan Holdings, revealed sales in its biscuits division had slipped 12pc to £22.7m.
The wider group, which includes Mr Boparan’s Goodfellas frozen foods business, also posted a 8.2pc slip in sales and a 20pc fall in earnings to £144.3m for last year.