Mackie’s of Scotland has said it expects “steep cost increases” to continue hitting profits this year.
The Aberdeenshire family business, best-known for its ice cream, reported a near-60% drop in profits and is still forecasting lower figures due to the impact of rising costs.
A statement signed on behalf of the board said: “The cost of cream, which is one of the company’s biggest outgoings for ingredients, had doubled by May 2022, compared to the average price in the previous year.
“The period also saw increases in the cost of several other key ingredients plus a large increase in packaging and freight costs.”
Mackie’s plan to ‘ride out the storm’
The most recent accounts filed at Companies House show pre tax profits fell by 59% to £1.7 million, from £4.1m.
Turnover also fell, to £17.7m from £18.5m, during the year ending May 31 2022.
The ice cream sector as a whole suffered over the same period, with the market shrinking by 7.4%.
This is being blamed on increased costs and a slowdown in sales since demand surged during Covid lockdowns.
Mac Mackie, executive chairman and one of three family owners at Mackie’s, said: “We are putting in place the foundations to be a bigger business and one that is even better equipped for growth in the years ahead.
“It’s also been a very difficult year due to the scale of the cost increases.
“While this looks set to continue and worsen, we have robust plans in place to ensure the family business rides out the storm and is here to be successful for generations to come.”
While this looks set to continue and worsen, we have robust plans in place to ensure the family business rides out the storm and is here to be successful for generations to come.”
Mackie’s 19.2 parlour, in Marischal Square, Aberdeen, also felt the “negative repercussions of the pandemic and cost-of-living crisis in the form of reduced spend and footfall”.
The company said: “These same issues have also affected Mackie’s wholesale customers who supply the food service industry, made up of restaurants, cafes and the catering trade.
“Sales to major retailers remain strong and market shares continue to rise year-on-year, but the cost increases will have a negative impact on overall company performance and profit is expected to fall again.”
Record increases in the cost of ingredients, haulage, feed and fertiliser have combined to make the outlook a challenging and unpredictable one for the ice cream company.
Continued investment
There was some good news with Mackie’s achieving its highest ever UK market share after adding nearly 500,000 customers across England, Wales and Northern Ireland, with numbers climbing from 939,000 in 2021 to 1,424,000 in 2022.
The fourth generation family farm, Westertown, near Rothienorman, is powered by renewable energy and started making ice cream – using milk and dairy from its own herd – in 1986.
Mackie’s said it had continued to invest in its biggest ever project – a £4.5m, low carbon refrigeration facility.
Currently partly operational and due to be fully deployed in the coming weeks, the innovative cooling system is expected to slash the firm’s refrigeration-related energy usage by up to 80%, along with its carbon footprint.
Looking to future growth
Mackie’s newly appointed managing director Stuart Common acknowledged the business was facing “major challenges”.
He said: “Despite the restrictions associated with the pandemic, we have maintained export sales of over £2m – which includes increased exports to the US.
“We’ve committed to unprecedented levels of investment into our operations to make us a more efficient and sustainable business.”
The company has to date launched more than 200 products and created in excess of 1,000 flavours. of its popular ice cream.
Conversation