Closures force Sims Food into red

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The Independent Online
THE RED meat butcher Sims Food has closed 40 per cent of its slaughterhouse capacity as part of a restructuring programme costing pounds 6.6m.

The exceptional cost pushed Sims into the red for the year to 31 March, when losses before tax were pounds 600,000 compared with profits last time of pounds 6.8m.

Sims' shares collapsed early last month when the company warned of the losses. The price was unchanged at 105p yesterday, having fallen from 182p before the profits warning.

Closing slaughterhouses cost Sims pounds 2.3m. The company was badly hit by a delay in the implementation of European Community health and hygiene regulations until 1996. Sims had upgraded its plant to meet the regulations but found its operation undercut by cheaper abattoirs that had not complied with the EC rules.

A further pounds 1.3m of exceptional costs was incurred in closing three distribution depots. Another pounds 1.3m was written off the value of two companies acquired in the late 1980s, Country Feast and J Redmond.

Sims also wrote off pounds 1.8m on machinery that was meant to tenderise beef and pork. After three years the machinery was found to be useless.

Overall operating profits for the year to 31 March slumped to pounds 5.9m against pounds 10m. Sims was hit by the devaluation of sterling, which made UK-produced meat attractive in price to overseas buyers but also forced meat prices up.

Sims had to take cost increases on itself because supermarkets refused to pass costs on to consumers.

The total dividend was cut by a third to 7.5p.