One of the largest egg producers in Scotland, Farmlay Eggs, blamed a squeeze on the retail market for a 40% drop in pre-tax profits.
The company, run by Robert and Ethel Chapman and 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 with Companies House reveal Farmlay, under its registered name Aberdeen & Northern Eggs Ltd, posted pre-tax profits of £1.514 million for the year ended May 31, 2014. This was down nearly 40% on 2013, when pre-tax profits stood at £2.507m.
Turnover at the company based at West Cockmuir, Strichen, near Fraserburgh was also down in the year to £15.866m, from £17.383m previously.
The firm, which sorts and packs between 3.5m and 4m 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 Highlands of Scotland.”
The accounts also reveal expansion plans for the company this year.
These include building a new-free range henhouse for 16,000 birds by March, and creating a new rearing unit for 55,000 day-old chicks in line with the rise 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 was retained and reinvested in the business, with a dividend of only £28,500 paid out in the year.
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 added that the rearing unit would be stocked by June.