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Listed bakery group Finsbury Food (FIF) has continued to benefit from its transformational acquisitions as sales jumped another 24.8% to £319.7m in the 53 weeks to 2 July.
Not accounting for the extra sales week, the top line was up 22.4% and 5% on a like-for-like basis.
The acquisitions of morning goods specialist Fletchers in October 2014 and Johnstone’s in June 2015, which are both fully integrated into the group, turned Finsbury into one of the largest speciality bakery groups in the UK.
But CEO John Duffy added that the underlying business performance was strong and exceeded expectations in a number of areas, including those not benefiting from the acquisitions.
The like-for-like growth came despite the deflationary environment and the tough grocery market as Finsbury invested in innovation, new facilities and its NPD teams.
Adjusted operating profit for the year increased 37.7% to £17.1m (34.7% for the 52-week period) (2015: £12.4m) and up 15.7% on a like-for-like basis.
The group also hiked the total dividend for the year by 12% to 2.8p.
“If 2015 was all about transformation for the group, then 2016 has been about delivering on our growth strategy and moving even closer to our vision of building the leading speciality bakery group in the UK focused on quality products,” Duffy said.
“There has been significant top and bottom line growth, as a result of considerable efforts across the whole company. The integration of Fletchers and Johnstones has been one of our priorities, and we continue to invest across all aspects of the business, diversifying into new channels and widening our customer base, to deliver a stronger platform for future growth and ensure our long term competitiveness.
“Looking ahead our strongly performing businesses and a robust balance sheet positions us well to both take advantage of growth opportunities and mitigate challenges ahead. The group remains as dedicated and focused as ever, and I remain confident that the patient, unwavering strategy adopted will reap benefits for the business in the years ahead.”
Finsbury shares are up 1.5% this morning to 137.6p on the back of the results.
Morning update
Dairy Crest (DCG) expects the combined first-half volumes of its four key brands – Cathedral City, Country Life, Clover and Frylight – to be ahead of last year after trading improved in the second quarter. A trading update for the six months to 30 September said that Clover, Country Life and Frylight were all showing strong volume growth and continued to increase market share, building on the momentum from the second half of last year.
However, volumes at Cathedral City have declined as Dairy Crest decided to maintain the price of the brand to firm up its premium positioning after launching new branding and packaging. Margins for the brand have improved as a consequence and volumes are expected to improve in the second half. Dairy Crest added that half-year profit would be ahead of last year, with expectations for the full year unchanged.
CEO Mark Allen said: “Dairy Crest expects to report a good performance in the first half of this year. We continue to see good momentum from our key brands. Our butters, spreads and oils business delivered strong volume growth and increased market share in the first half. There has been a very positive customer response to the Cathedral City refresh which should underpin future growth of the brand.
“Recently we have seen inflation across all dairy markets. To date we have announced increases amounting to 12% in the milk price we pay our farmers. Cream prices have been particularly affected, doubling over a very short period. This sudden cost inflation is likely to have an impact on butter volumes and margins in the second half.
“As a strong branded and added value business, Dairy Crest is well placed to deal with inflationary pressures. As such our outlook for the full year remains unchanged.”
Real Good Food (RGD) has created a new business to concentrate on further growing its cake decorating export business across the Americas. Renshaw US Inc, which will trade as Renshaw Americas, has secured five year lease on a 18,750 sq ft warehousing facility in Rockaway, New Jersey. It will initially employ a commercial team of four and will act as a sales and distribution hub to sell cake decorating products from the Real Good Food stable initially across the US and Canada and eventually on a wider scale across the rest of the Americas.
Executive chairman Pieter Totté said: “The USA and Canada are very important markets for our cake decorating business. It already accounts for around 10% of our overall export sales and by establishing a permanent presence we believe there is scope for future growth and improved margins with operating efficiencies and better supply chain management. We can now ship in bulk quantity directly to a storage and distribution facility in an optimal location for onward distribution. This leads to manufacturing efficiencies in our factories in the UK and ultimately better customer service and improved margins.
“With an established presence we also see the opportunity to broaden our customer base and in particular we are excited about the growth opportunity for sugar paste, as opposed to soft icing, as this market is largely underdeveloped across the Americas.”
In a separate move, Real Good Food has also rebranded its Real Good Food Europe division as Renshaw Europe, to reflect the business’s focus on cake decoration products.
Shares in Dairy Crest are up 1.2% to 675.9p on its trading update and 1.4% at Real Good Food to 37p. The FTSE 100 has started the week well, jumping 1.3% to 6,793.05 points, with market confidence in Tesco (TSCO), Morrisons (MRW) and Sainsbury’s (SBRY) up, with share prices rise of 2.4% to 173.4p, 2% to 215.8p and 1.4% to 243.7p respectively.
This week in the City
It’s looking set to be a quieter week on the markets after the Morrisons and John Lewis half-year results last week.
The McColl’s extraordinary general meeting on The Co-op deal is being held this afternoon at its headquarters.
Stevia producer PureCircle will report on its preliminary results tomorrow and Diageo has its AGM on Wednesday.
And the latest monthly Kantar/Nielsen grocery market share data are due out tomorrow.
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