Farmfoods, headquartered in North Lanarkshire, recorded a pre-tax profit of £33.1 million for 2024, up from £25.5 million in 2023. However, the company’s operating profit fell sharply from £23.9 million to £9.8 million as it worked to keep prices low for customers while costs increased across the business. Sales climbed from £1 billion to £1.1 billion, demonstrating ongoing demand for Farmfoods’ discount offering.
The profit margin squeeze is attributed to rising costs affecting everything from labour and energy to transportation and product inputs. Like its peers, Farmfoods faces growing wage bills due to increases in the National Living Wage and higher National Insurance contributions, alongside elevated energy and supply chain expenses. The company’s new accounts highlighted a particular commitment to resisting price increases, differentiating itself from some rivals who have passed additional costs onto consumers.
Despite these headwinds, Farmfoods continued to invest significantly in its business, focusing on opening new retail stores and boosting distribution capabilities. Recent expansions include a new distribution centre in the North West and ongoing upgrades to the company’s Midlands coldstore, as well as new store locations across the UK. There has also been a drive to enhance the frozen food product range and develop non-food product lines.
Farmfoods’ results come as fellow discount supermarket Iceland reported a shift from profit into the red, underlining the acuteness of cost pressures on value-focused grocers. Industry-wide, UK food inflation and regulatory changes continue to challenge retailers, with labour and operational costs on the rise.
A statement from the board said: “The group continued to trade profitably during 2024, however our commitment to keep prices low for our customers while facing increased cost pressures throughout the business resulted in a reduction in profitability compared to the prior year.
“Our core frozen product range was enhanced through continued new product development while new lines in grocery and household further expanded out offering to customers.
“The group made significant investment in opening new retail stores while also increasing capacity within its distribution function.
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“The group plans further investment in shops in the coming year.”
Farmfoods aims to sustain its strategy of price competitiveness for customers while navigating ongoing cost escalation. The company plans further investment in stores and distribution in the coming year, maintaining a focus on value amid industry uncertainty.
