Finsbury Foods has reported a significant increase in profits as the bakery ramps up production of Heston Blumenthal’s new hot cross buns in time for Easter.
Adjusted profits before tax rose, ahead of analyst expectations, by 19% to £2.22m for the six months to 31 December.
The profits were boosted by a 16% increase in total sales to £14m and lower interest payments over the period. New licenses in celebration cakes, including Fireman Sam, and increased promotional activity helped drive sales growth.
Finsbury is hoping that a contract with Waitrose to make Heston’s Earl Grey and Mandarin hot cross buns will help keep up sales momentum over Easter.
“We’ve increased production enormously over the last couple of weeks to prepare for the launch,” said Finsbury CEO John Duffy. “It’s the first time we’ve worked with Heston - we’re optimistic about the sales prospects.”
Finsbury has come under pressure over the past year from rising raw material prices, especially sugar. The company said the cost inflation had led to a small drop in margins from 3.6% to 3.4% despite its best efforts to improve efficiency and productivity.
Duffy said the company should hopefully see some benefit from the better UK sugar crop this year. However, he does not expect the company’s input bill to drop. He said commodity prices remain high and some key raw material prices have increased further of late – notably egg prices have been driven up by supply problems caused by the EU battery cage ban earlier this year.