Controlling energy is vital to survival.
This food manufacturing customer bill demonstrates clearly how significant the recent hikes in energy prices are. This company made £4.8m profit in 2021 with sales of £230m (2% EBIT). However, their energy cost has increased by more than £13m in a year – a rise of 256% – meaning a P&L loss of >£9m unless they can increase prices to its customers by at least 6%.
The knock-on impacts ?
1. It is unlikely that their employees will receive a pay rise, allowing them to afford the 6% rise in food prices in the supermarket.
2. The company’s credit rating is going to suffer, reducing their ability to borrow and invest.
3. Corporation tax revenue to the Government is going to fall by around £3m.
The Government’s support scheme for businesses isn’t going to bridge the gap.
So, energy really is a very significant issue for the survival of this company, but also our food supply chain and fiscal revenues.
Taking control of energy costs by reducing consumption and having on-site generation must be the way to avoid and correct this situation. It’s not too late to take corrective action.
If you would like to discuss how to implement energy efficiency measures, onsite generation or develop and roll-out a carbon reduction plan for your business, please contact David Kipling, CEO – On-Site Energy Ltd on 0151 271 0037 or email david@on-site.energy. You can also contact our Strategic Account Manager, David Jamieson, on 07990787876 or dj@on-site.energy.
