August 13, 2022

Frozen items retailer Iceland set to be hit by a £140m invoice to run its freezers as vitality costs soar

  • Fitch expects Iceland’s earnings this yr to drop beneath £100m, in contrast with £126m final yr, because it won’t be absolutely capable of move on the rising vitality prices 

Iceland might be hit exhausting by hovering vitality payments this yr due to its enormous reliance on freezers. 

The frozen items retailer had an enormous £70m vitality invoice final yr, equal to round 2pc of its gross sales. Within the first quarter alone its invoice jumped by £19m, suggesting it’s on target to greater than double this yr. 

Vitality costs have spiralled within the wake of Russia’s invasion of Ukraine. And the low cost grocer, which has near 1,000 UK shops, is uncovered as a result of a 3rd of its gross sales are frozen meals. 

Iceland might be hit exhausting by hovering vitality payments this yr due to its enormous reliance on freezers

In its most up-to-date annual report, Iceland mentioned the risky vitality market means will probably be ‘unable to keep away from a short lived discount in earnings’ this yr. 

Scores company Fitch mentioned the low revenue margins and relative lack of hedging, the place firms agree with suppliers to set costs far upfront, depart it susceptible to the volatility. 

Fitch expects Iceland’s earnings this yr to drop beneath £100m, in contrast with £126m final yr, because it won’t be absolutely capable of move on the rising vitality prices. 

See also  Sage boss Steve Hare: Our tax system should be remodelled

The company added that if vitality prices proceed hovering, earnings might be constantly lowered and will probably be much less capable of pay down its money owed. Regardless of the awful outlook for vitality costs Iceland mentioned it might more and more choose up clients from rivals, as buyers transfer from recent to frozen items to save lots of money.