Cakes and baked goods supplier Finsbury Food Group has revealed it is looking to double in size through acquisitions.

New chairman Peter Baker set out the ambition as Finsbury  announced an 18% year-on-year hike in adjusted profits to £6.5m on flat revenue of £175.7m in its full-year results [financial year to 28 June 2014]. Baker - a veteran of businesses including RHM Consumer Brands, British Bakeries and Rank Hovis Mills – took up the role on 1 July from Martin Lightbody.

Finsbury had turned a “significant corner” in recent years, said Baker, and achieved “an encouraging degree of momentum” in a difficult market against a backdrop of increasing commodity costs.

“We can bring about a degree of organic expansion but growth will primarily be realized through acquisition and mergers,” he added “There is a window of opportunity in the markets and the board is actively exploring investment options.”

Increased scale would “stimulate fresh routes to market, diversification of our customer base and a new perception of the company among analysts and stakeholders”, he said.

Referring to Finsbury’s last financial year, chief executive John Duffy said the first half had maintained the impetus of previous periods, but admitted the second had been more challenging.

“Commodity price inflation began edging back upwards with escalating costs in chocolate, butter, energy and labour,” he said. “Our historical customer base was adjusting to meet the threat of value-oriented discounters and we found ourselves squeezed on all sides.”

“Refocus was imperative,” Duffy added. The management team set about eliminating £1m in annualised overhead costs and increased capital spend with projects including installation of robotics at its cake factory in Scotland and extending space at speciality breads supplier Nicholas and Harris by 60%.

Duffy added that speciality bread had been one area of disappointment for the business following strong growth in previous periods. “A flat year was primarily caused by market dynamics, specifically the impact of the so-called ‘Bread Wars,” he said.

Describing the past year as a “volatile and turbulent”  one for the bread market, Finsbury said its Vogel’s, Crank’s and The Village Bakery rye breads had maintained their position.  The business announced it would this year relaunch Crank’s  with added vegetables.

Changes in the wider retail marketplace, particularly the growth of the discounters, had made for a delicate commercial situation, added Duffy. “There are self-evident sensitivities between our historical customer base and the burgeoning new players. Ultimately, you have to follow the consumer but existing relationships must be safeguarded.

“There will be an element of organic expansion but growth will primarily be realised through acquisition and mergers which will in turn help us respond to consumer needs through diversification of products and customer bases.”