Food firm pins its hopes on exports to Sweden

Nov 27 2008 by Peter McCusker, The Journal

AN ambitious frozen food business has started exporting to Scandinavia as it steps up its efforts to come out of the red for the first time in four years.

Vidar Engen, managing director at the Findus factory in Longbenton, Newcastle, secured orders for the Newcastle Foods range and delivered the first batch to Sweden two months ago.

While the company accepts that the market is tough, with two day-long factory shutdowns this month, Mr Engen is hopeful that Newcastle Foods will accelerate its growth.

The company’s turnover is expected to be up 5% this year at £34.5m and grow to £40m next year.

Mr Engen said: “We only have the Findus licence for the UK and Ireland so, to export, we had to form a new company, hence Newcastle Foods.

“We have two export contracts; one for Sweden and a second for the Baltics, greater Europe and Russia.

“It’s early days but we are growing the export business quite nicely and we could add a further £5m-£7m to turnover from these markets.”

The Newcastle factory is owned by Geir Frantzen, a former senior manager at the Findus parent group, who bought it from Swedish private equity firm EQT in April 2005.

It produces crispy pancakes, frozen fish, French bread and frozen pasta for most of the country’s main retailers. The Findus brand was launched in Sweden in 1945. In 1962, it was sold to Nestlé and in January 2000 was bought by EQT.

In its first year it lost £5m, by 2006 that was cut to a £2.5m loss and in 2007 it lost £937,000, despite seeing its turnover soar by 20%, to £32.8m.

Mr Engen continued: “Retail UK is having a tough time, but people still need to put food on the table.

“Frozen food sales are holding up, people realise they are good value for money and, unlike chilled foods, they can be kept. We need to achieve more volume but with the recession we are in that will be difficult.

“However, people need to eat. People can defer buying a new car, furniture or get their shoes repaired, but they need to put food on the table.

“But it’s not just growth the business needs, we have to transform this factory into a profitable venture. We have to make sure we have a viable future for the next 10 years and take action to ensure we achieve that.”

The company employs 400 staff, reducing numbers recently by allowing part-time, temporary staff to leave when their contracts expired.

Mr Engen said the company had also shut the factory down for two Fridays in November as a result of a slowdown in orders this month.

He added: “Our ambition is to keep staff levels at the same levels they are now.

“I tell the staff, if we could, I would like to work a seven-day week, but our production levels are determined by the market.”