Seed companies on the up in latest returns

Traditional seed companies have turned around their businesses, with Suttons and Thompson & Morgan revealing profitable returns despite 2016's poor spring.

Image: HW
Image: HW

Suttons' consumer profits audited accounts for the 12 months to 31 July 2016 show an operating profit of £567,000 compared with the previous 12 months' comparable profit of £203,000. This represents a 179 per cent increase in profits along with a further improvement in gross margin to 44.9 per cent (43.9 per cent in 2015). Turnover was down by £1m to £12.8m because of providing partial returns and the end of an unprofitable own-label account.

Managing director David Robinson said chasing sales with low margin and selling at cheaper price to direct customers is counterproductive. "We're not going to go for business for the sake of it," he added. "There is a tendency to fight for sales by discounting and undercutting but everyone will lose if we keep doing that."

He said working hard on details including systems, margins, customer service, research and stocking has paid off. "Over the past year there has been further investment in all parts of the business with an emphasis on attracting good people and providing them with the right systems and information to make better decisions. Significant investments have been made over the past 12 months in IT systems and processes to improve efficiency throughout the business."

Taking a risk on holding on to stock helped gain sales when poor spring weather finally ended, he added, and Suttons has "changed the mix" on products with some home-grown perennials now available for direct sale, and grafted plants more prominent. Robinson said innovation is important, with Gavin Shaw expanding perennial/tree/shrub ranges and Rob Smith developing heritage vegetable products.

Packet seed now represents just 30 per cent of total sales. He said the overall packet seed business has been "static at best" for years but Suttons has grown it this year. The company recently acquired the Ascott smallholders' supplies business. Further company acquisitions are being actively pursued.

Robinson emphasised the importance of margin. "It can be tempting to attract new direct customers through discounted online seed offers but in contrast to some competitors, and in recognition of the potential adverse effect on the retail market, last year Suttons once again rejected online discounting of packeted seeds as a marketing tool. Instead we concentrate on providing year-round value for money on all our products."

Branded Garden Products, which trades as Thompson & Morgan and other firms, increased turnover in the year to 30 June 2016 to £33.879m from £31.881m (up 6.2 per cent), with operating profit at £1.01m, up from a £1.166m loss. EBITDA was £1.882m, up from a £219,000 loss.

T&M said: "The directors regard this performance as evidence of the continued year-on-year improved business performance and trading," adding that "increased presence online" is important. Director Bryan Magrath said new product development remains essential. T&M's new sweet strawberry "Just Add Cream" from its breeder Charles Valin is one such exclusive product. T&M promised to "continue to grow organically". The company is believed to be on the market.

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