Business spotlight: feeding the nation
18 May 2020: Craig Tomkinson, Group CFO at £2.7bn turnover 2 Sisters Food Group, tells ICAEW Insights about the unprecedented challenges his firm has faced during the coronavirus crisis and the steps it has taken to meet them.
Helping to feed a nation is no mean feat at any time but none more so than during the current COVID-19 pandemic, and for Craig Tomkinson that has never been truer.
“It’s been truly humbling to see the extraordinary efforts of the food retail supply chain working together to feed the nation over the past few weeks,” Tomkinson told ICAEW Insights.
“It’s not always considered the most glamorous work, but we are finding out now just how important it is. I’m proud to be a part of the food industry, and especially proud to be part of a business that is innovating relentlessly in a crisis to deliver truly remarkable results in unprecedented circumstances.”
Privately owned by the Boparan family, 2 Sisters employs some 20,000 people peppered across multiple sites in the UK and Europe. It is the UK’s largest premium ready meals processor, knocks out 30 million hot cross buns each year and processes nine million chickens a week.
Among its stable of brands are Fox’s biscuits and Holland’s which supply match day pies to hungry fans at Manchester United and Blackburn Rovers.
Having started life in 1993 in West Bromwich as a frozen chicken cutting and packaging outfit, 2 Sisters is now Europe’s largest supplier of chicken products.
Tomkinson says the capacity and supply chain challenges are “totally unprecedented”, especially when “overlaying the number one priority of doing everything in our power to protect the health and wellbeing of our colleagues”.
He’s especially encouraged by how different elements of the supply chain have come together, particularly the retail supermarket vertical from farm to supermarket, one he dubs “notoriously challenging” thanks to its tight margins and tough commercial negotiations.
That has to a large extent been put aside – for now at least - to get on with the bigger job of feeding the nation.
However, managing employee communications “has been a challenge for us”, says Tomkinson, especially in the first few days and weeks of lockdown when there was “some mixed messaging” from the government for key workers outside the healthcare sector. This was exacerbated somewhat in the food industry where English is not the first language of many workers.
But like many others in the food sector, they are working closely with government bodies to ensure better clarity and make sure those working are able to come to work to support the national effort.
The pandemic struck 18 months into a turnaround programme for the company: one in which Tomkinson is the driving force, having returned to the business in 2018 after three years away from the fold.
He is leading that drive at pace and with a great focus on cash with the urgency and action he believes is “imperative” to the success of any turnaround programme”, ensuring that the finance function is well-placed to move into something as unexpected as the COVID-19 crisis.
While there have been some “very specific challenges” over the last couple of months, in particular operating a large shared service centre through remote working, “the change of pace into a full-on crisis such as COVID-19 is probably not as acute for us as it has been for others,” says Tomkinson.
The turnaround strategy is tightly focused on improving performance in its core business and the drive to “selectively realise value” through the disposal of non-core businesses. Tomkinson has overseen five disposals in the last two years.
The objective is to improve the strength of its balance sheet and ultimately reduce the group’s debt levels and improve EBITDA.
And it is the engaging and diverse blend of financial stakeholder interest that makes it an “incredibly interesting CFO role” for Tomkinson.
Whilst being 100% Boparan-family-owned, the business also has publicly traded bonds, “so we have to meet many of the governance requirements of a listed business” which brings an interesting investor relations dynamic”.
As the tentative beginning of the end of lockdown gathers pace, Tomkinson believes there’s a “huge challenge” coming for the finance profession that will require a very different skill set and behaviours from the finance profession.
“Turnaround skills are going to be more valuable than ever, as is the ability to operate at pace with a cash focus and at an extraordinary level of detail. I’ve interviewed a lot of FD-level candidates down the years, and while some do have these skills, there’s a lot more that don’t.
“I’d challenge the profession and all CFOs to think about how they develop more finance professionals with really good business turnaround skills because when a business needs turning around, it’s the finance function that needs to lead.”
Understanding working capital and cashflow will also be key, argues Tomkinson. “You hear a number of people say ‘cash is king’, but few really understand cashflow. Ultimately a mismanaged cashflow is often the one thing that can lead a company to go out of business,” says Tomkinson.
“We are already seeing some corporate casualties and my fear is that the recession that follows will be even more brutal and severe than the economic impact of the crisis itself.”
For Tomkinson and the 2 Sisters Food Group, their turnaround journey will continue as the country emerges from the COVID-19 crisis “while doing everything we can to support feeding the nation, having made sure we protect our products, our people and our business through that as well.”
And the realities of the somewhat dystopian world in which much of the world finds itself is not lost on Tomkinson.
“I can see how it is very, very frightening for many, many people. It is going to need the nation to continue to work together and do what it can to ensure that we can protect and safeguard the health and livelihoods of as many people as possible.”