The largest egg producer in the north-east – Farmlay Eggs – has blamed a squeeze on the retail market for a 40% drop in pre-tax profits.
The company, which is run by Robert and Ethel Chapman and their son Iain, supplies all the free-range eggs to Morrisons and Aldi in Scotland.
Around half of the eggs are produced on the family’s 1,800-acre farm, with the remainder sourced from 19 contract producers in Aberdeenshire, Moray and as far north as Wick.
Accounts filed with Companies House reveal that Farmlay, under its registered name Aberdeen and Northern Eggs Limited, posted pre-tax profits of £1.514million for the year ended May 31, 2014. This was down nearly 40% on 2013 when pre-tax profits stood at £2.507million.
Turnover at the company, which is based at West Cockmuir, Strichen, near Fraserburgh, was also down in the year to £15.866million, from £17.383million previously.
The firm, which sorts and packs between 3.5million and 4million eggs every week, said the drop in turnover and profits was mainly due to a squeeze in the retail market.
In her director’s report, Ethel Chapman said: “In the near future we expect the squeeze in the retail market to continue. To combat this it is hoped to launch two new packs into Morrisons and Tesco under the new brand ‘Nearer Fresher’ which will focus on local eggs from the Scottish countryside and the Highlands of Scotland.”
The accounts also reveal expansion plans for the company this year.
These include the building of a new free range henhouse for 16,000 birds by March, and the creation of a new rearing unit for 55,000 day old chicks in line with the increase in laying bird numbers.
The Chapmans also plan to apply for funding under the processing and marketing grant scheme, which is part of the Scottish Rural Development Programme, to upgrade the oldest part of the packing centre.
Mrs Chapman said: “The extension will increase the floor area by a further 45% for storage of both packaging and eggs. We would hope this would be in place by late 2015.”
She said 97.5% of the profit had been retained and reinvested in the business with a dividend of only £28,500 paid out in the year.
Speaking to the Press and Journal, Robert Chapman said: “The supermarkets are just squeezing and squeezing prices; it’s as simple as that. They are looking for suppliers to discount prices so that’s what has affected the profit and turnover.
“This year it’s much the same; the retail market has not changed much.”
He said the company aimed to have the new Nearer Fresher range on supermarket shelves by the spring and said the reari