Almost 200 jobs are on the line after the owner of a major Grimsby seafood processor announced it is pulling out of the UK.
Icelandic Seafood International is to withdraw from the value-added business, having taken on the former Five Star Fish facility by the entrance to the town as Covid hit. A sale is being sought, with interest understood to have been established.
ISI had united an existing West Yorkshire operation with the neighbouring Havelok business, bringing back to use the heavily invested 100,000 sq ft plant, last operated in 2018 by 2 Sisters. As reported in August, ISI had told how the plant was taking longer to break even than anticipated. Now losses of £8 million have been revealed for the first nine months of the year.
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Group chief executive Bjarni Ármannsson said: “Iceland Seafood UK invested in operating facilities in Grimsby and merged its operations from Bradford and Grimsby into this location. The investment and decision of the merger was completed in March 2020, just before Covid-19 started, and the renovation and installation of the factory was very much affected by Covid and later Brexit along with difficulties in overall operations.
“Iceland Seafood has now decided that it plans to exit this market from a value-added perspective and has mandated MAR advisors to support the process.
“Although it has been concluded that the UK operation is not a strategic fit for Iceland Seafood anymore, the excellent facilities and strong management team in Grimsby can be a great addition to other companies in the sector.
"We have started a sales process and will report as soon as we can on what comes of that."
Sources have confirmed interest is emerging, with at least one party, with staff informed of the potential.
Built by Five Star, the company former Grimsby Town chairman John Fenty founded, it was sold on with successive buyers running into trouble. A total of 380 roles were lost when it finally closed in 2018, with contract losses cited, though the frequent contract merry-go-round to serve the major retailer saw both the work and jobs taken elsewhere in the cluster.
Explaining the situation in an update to investors, Mr Ármannsson said that “continuing effects of a challenging external environment and operational difficulties negatively impacted the UK operation”. “Significant price increases of various input factors negatively impacted margins and led to further losses both with respect to prior periods and short-term outlook,” he said, adding that the UK's performance has “eroded the group profitability to the extent that the board no longer feels it’s justifiable to continue,” with management resources devoted to it instead of capturing growth opportunities elsewhere.
“2022 has turned into a very challenging year," Mr Ármannsson added. "A year where we expected Covid-19 to end and life to go back to ‘normal’ – which turned into a year, characterised by a war in Europe, disruptions in value chains, high volatility in commodities, food prices and cost of capital,” he said. “We are experiencing headwinds, which require difficult decisions to be made and sails to be adjusted to the change in winds. We believe in the future and that we are well positioned in our key markets with well-run value-added operations in Europe. But we must adjust to a different reality and are therefore exiting the UK market from a value-added perspective. This is a difficult decision, but I believe it is the right one. We are committed to our main stakeholders and maintain our commitment to run a profitable business within the European value-added seafood industry. We see opportunities but realise that we must be rational - and careful in the very near future.”
MAR will evaluate different options for the £3.5 million plant in the coming weeks.
The move had been one of several strategic investments highlighted as part of a £13 million equity raise. with a public listing. Havelok and Icelandic Seafood Barraclough became one legal entity, Icelandic Seafood UK, as part of a group with a turnover of £390 million and a market capitalisation of £162 million. It is one of seven factories and 12 businesses across eight countries operated by ISI.
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