One in four food companies ‘at risk of insolvency’

A host of the UK’s leading food and drinks manufacturers are under severe financial pressure, according to a new study.

Analysts at Company Watch put 173 of the UK’s 680 largest food and drinks makers in their ‘warning area’ of companies vulnerable to insolvency or other financial difficulties.

The ratings are based on companies’ most recent published accounts and reflect concerns that many food companies suffered from “weak balance sheets that lacked the strength necessary to support their trading”.

Company Watch singled out the likes of Premier Foods, Dairy Crest and Britvic as being particularly at risk.

“The accounts we examined are mainly for periods ending during the latter part of 2010 and early 2011, which means these figures do not yet reflect fully the upward pressure on manufacturers costs from rising energy and commodity prices,” said Nick Hood of Company Watch.

“Once these factors feed through, we can expect the financial health of the sector to deteriorate further, with more manufacturing companies falling into our warning area and becoming vulnerable to insolvency or restructuring.”

Sourced from The Grocer