Higher prices for beef and chicken negatively hit third-quarter profits for 2 Sisters Food Group, the UK company controlled by billionaire Ranjit Singh.

Third-quarter results for the 13 weeks to the end of April show operating profits at 2 Sisters plunged a massive 77% to £3.1m (€3.5m), as profit margins narrowed from 1.7% last year to a razor-thin 0.4% this year. Sales for the quarter increased almost 2% year on year to reach £837m (€950m).

2 Sisters blamed the decline in profits on price inflation for beef and chicken, which more than offset improved sales volumes. The group said the business performance was “disappointing” but it was in the process of reducing overheads by some £20m with the closure of four processing sites.

During the quarter, 2 Sisters completed the sale of its Goodfella’s pizza business to Nomad Foods, the largest frozen foods manufacturer in the UK, for £200m (€227m).

2 Sisters will use the cash from the sale of the Goodfella’s business to reduce its net debt position, which stood at £623m (€706m) at the end of the quarter. The group is highly leveraged with a net debt to earnings (EBITDA) ratio of 4.8 times.

During the quarter, Ronald Kers took up his position as the new chief executive of 2 Sisters.

Kers is the former chief executive of the multinational dairy giant Müller and has also worked with Nestle and Proctor & Gamble.