Continued successful development
Boughey Distribution is a leading consolidator of ambient grocery products to UK supermarkets with over 1,000,000ft² of warehousing and significant distribution assets.
The business operates in a competitive supply chain and needs to continually demonstrate the value and service that it provides to food manufacturers and importers. The business has a leading position in consolidating ambient grocery products in the North West, with high service levels, industry leading systems and a strong operating performance being the key components of its customer proposition.
Food delivered a strong performance improvement as a result of increased outloads and associated backhaul work, fully utilised warehouses throughout the year and improved efficiency levels.
Angela Carus, Managing Director, Food
- Optimise the customer mix
- Optimise storage and distribution solutions on the Wardle and Crewe sites
- Crewe – a centre of excellence
- Total capacity 135,000 pallet spaces
- Value added niche businesses
- Targeting step-change expansion backed by customer and retailer contracts
Review of the year
Food delivered a strong performance improvement as a result of increased outloads and associated backhaul work, fully utilised warehouses throughout the year and improved efficiency levels. Delivering a high level of service and operating efficiently has supported the division in both passing through inflationary cost increases and winning additional business from existing and new customers in the year. Labour turnover has reduced and we are fully resourced for both drivers and warehouse staff. A focus of the team has been on non-financial initiatives including healthcare and wellbeing to improve retention levels.
Revenue increased by 13.3% to £70.9 million (2022: £62.6 million). Storage overall was at an average of 122,000 pallets (2022: 118,000 pallets), with warehouses effectively utilised across the year. Demand for our customers’ products increased in spite of the cost-of-living crisis. Retailers have reported stable demand for ambient grocery and demand has particularly increased from the discounters winning business from the higher priced retailers. Outloads were 7% higher than prior year whilst storage levels were up 3%, highlighting a positive overall increase in the stock turn of our customers’ products.
New business has been gained from existing and new accounts to the extent that overflow warehousing is being utilised over the summer peak period. We continue to evaluate opportunities to further expand the warehouse base backed by customer contracts.
Headline operating profit was £4.2 million (2022: £2.8 million). Whilst the packing room increased activity strongly in the year and e-fulfilment was stable, it was not sufficient to offset a reduction in Palletline contribution which suffered as hauliers used their own vehicles more as a result of lower overall economic activity and reduced network throughput.
Demand for our customers’ products continues to be stable and the outlook for most product categories handled by the business is resilient. The business operates in a competitive supply chain and needs to continually demonstrate the value and service that it provides to food manufacturers and importers. We have a leading position in consolidating ambient grocery products in the North West, with high service levels, industry leading systems and a consistent operating performance being the key components of its customer proposition.
Market trends and responses
Significant inflation in the food supply chain
Inflation in the food supply chain has been well publicised and it has been critical that we operate efficiently and continue to provide a great level of service, which we have demonstrated in the last year. We have been subject to numerous sources of input inflation with wages, insurance rates, energy and fleet all increasing in costs. We have been successful in passing these inflationary costs through to our Food customers as we have been able to demonstrate a high level of service throughout the year and remain very competitive in a market where managing inflation is a key challenge. We have an escalator in our contracts for fuel costs which passes through increases or falls to our customers.
Availability of labour
We have been successful in recruiting and retaining our staff, with labour turnover reducing in the year. There has been an intentional focus on non-financial elements including healthcare provision and a wellness programme along with Christmas hampers and Easter eggs for all staff supported by a chocolate customer. In addition, we paid a one-off bonus in January to lower paid colleagues to support them through the challenges of the increasing cost of living. Positively, we have a full complement of warehouse staff and have a small waiting list for people wanting to join us as HGV drivers.
Warehouse Operations Director