UK: Muntons toasts a big rise in earnings and profits

A Suffolk-based malt firm is toasting a big rise in earnings and profits - as figures show manufacturing output across the East of England grew by 15% in the last decade, the East Anglian Daily Times reported on July 16.

Muntons of Stowmarket is one of a number of beneficiaries of a big ten-year rise recorded in output by Make UK/BDO in their Annual Regional Manufacturing Outlook report.

Another is agricultural machinery manufacturer Claydon Drills, which says it has seen "massive" growth in the past decade.

Founder Jeff Claydon - who set up the business on the family's arable farm at Wickhambrook, Newmarket, said sales have risen by more than 300% since 2013, when exports accounted for less than 30% of turnover.

Since then overseas they have increased six-fold and now account for 60% of production. However, post-Brexit red tape has made processing them more complex and time-consuming.

Family-owned Muntons has just come to the end of a successful five-year investment plan to boost its operations.

Its latest financial figures for the year to the end of December 2023 show turnover up 37% from £130m to £178m since 2022.

Food and drink is the biggest manufacturing sector in the East of England, accounting for 13.3% of the region's industrial output, according to the report.

Pharmaceuticals comes a close second at 12%, followed by machinery and equipment at 10.8%.

The East's manufacturing range is broader than in any other region - with the highest proportion of other sectors not in its top three.

Despite a volatile few years for the industry, Muntons has seen a big uptick with profits before tax up from £6.4m to £8.6m - a 34% rise.

Earnings (EBITDA) rose by 40% from £14.0m to £19.6m. Meanwhile the company saw its debt fall from £69.5m to £52.9m in line with falling grain prices

It was "another record year in which we were able to recognise the benefits of the large capital investments made across the last five years", said the company.

Among recent highlights for the company was scooping a top sustainability rating from Ecovadis for the second year running and a 2024 King's Award for Enterprise for sustainability development.

It has overseen the turnaround of what was previously a joint venture in Thailand after taking over full ownership of the company in 2019.

Muntons Ingredients Thailand Ltd was turned around from a £1m earnings loss-maker.

Having secured a big UK contract with a UK-based malted milk powder producer and after growing its customer base, its earnings grew to £796k and this is expected to double in 2024 as the factory continues toward full production capacity.

Chairman Paul Wells hailed the strong set of results which he said were a result of long-term considered investments coming to fruition along with commercial expertise.

"With such strong results it is on behalf of the shareholders that I offer our thanks to Mark and all colleagues on the Muntons team.

"In this chapter of growth in the company’s history they have overcome many challenges and dramatically developed the business.

"The outlook for this year is generally positive with inflation falling and interest rates beginning to decline.

With signs of consumer confidence returning and pushing up demand, the company has "extensive" plans for investment in its existing plants, he said.

Managing director Mark Tyldesley said five years after concluding its refinancing with HSBC, the business was "finally seeing the economic benefits of the huge investments we have made to sustain and grow the business for the next 20 years".

"Our financial performance stands as a testament to the strength of our strategic decision to continue to invest in capital, in people and in sustainability amidst the backdrop of unprecedented global turbulence."

The plan over the next five to 10 years is to continue to focus on people, planet and sustainable profitability through innovation and investment, he said.

As well as focusing on staff engagement, sustainability remains a core goal, he said, with the company's platinum award from Ecovadis putting it in the top 1% most sustainable businesses worldwide.

"In 2023, we extended the use of renewable heat in our maltings process at Stowmarket, and launched our internal Sustainability School enabling all our staff to engage with and be advocates for us in the outside world.

Competitors are also working "extremely hard" on decarbonising their energy, making the malting industry an exciting place to be, said Mark.

Earlier this year, another malt business - Belgian-based global maltings company Boortmalt - became the first malt firm in the UK to pilot an electric lorry at its Bury St Edmunds plant.

Meanwhile Muntons is working with farmers to decarbonise farming and increase soil health.

"Our next challenge is to be at the forefront of collaborative leadership across the supply chain, bringing regenerative farming to scale with our customers and our suppliers alongside our industry peers," said Mark.

The firm is also continuing to push hard on innovation and finding new markets and new uses for malt and malted ingredients around the world.

Claydon Drills makes drills - designed by Jeff and his team - which enable farmers to plant seeds with minimal disturbance to soils.

These are exported around the world and the company doubled its production capacity last year in response to growing demand.

“We are currently very busy supplying our products to dealers and their customers all over the world," said Jeff.

"With the farming industry currently under significant financial pressures due to lower commodity prices, producers are having to look at ways to operate even more efficiently.

"We believe that will further increase demand for Claydon Opti-Till machinery and consequently result in continued expansion for our business.

“In the UK the Farming Equipment and Technology Fund (FETF) grants which were introduced by the last government have done much to keep our industry sector buoyant by encouraging farmers to invest in more efficient machinery.

"We hope that will continue under the new regime and that they will ensure that grants are processed more quickly.”

According to the Make UK/BDO report, there are more than 220,000 manufacturing jobs in the East of England

Manufacturers in the region have increased their output significantly in the last decade and it is now 8% higher than pre-pandemic levels, it found.

In 2023 the East of England accounted for 9% of the UK’s total goods exports with the EU the main destination (49%) followed by the United States at 21% and Asia & Oceania at 14%.

Chris Corkan, region director for Make UK in the East of England, said manufacturing was "critical" to the growth of the economy, and provided high value and high-skilled jobs.

“The new government has made a welcome bold statement of its intent to tackle the UK’s anaemic growth at national and regional level," he said.

"It should now back this with a radical, cross government, long-term industrial strategy which has the need to tackle the UK’s skills crisis at its heart.

"This should be allied with the local growth strategies and priorities of each region, including infrastructure and innovation, together with other measures to ensure the UK is now fully open for business.”

Peter Harrup, head of manufacturing at BDO in the East of England said the region has shown "great resilience".

“Over the last few years, manufacturers across the region have faced multiple external shocks and changing policy priorities," he said.

"There is now an exciting opportunity for the sector to work with the new government on the development of a new long-term industrial strategy.

"This could unlock vital investment needed across the region to continue to bolster manufacturing output and skilled employment opportunities.”

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