Sales up for Finsbury Foods despite challenges

Finsbury Food Group, the manufacturer of cake, bread and gluten free bakery goods, has reported a strong organic growth trend established in the first half, which has continued to strengthen during the second half. This has resulted in total group revenue up 12.8% to £189.9 million compared with the same period last year, reversing the 6% decline of the last full year.

Sales in the larger cake division were up 12% compared with the prior year to £139.9m. Approximately half the growth came from the UK cake business and half came from the Lightbody Europe (LBE) 50% owned joint venture export business. The UK cake growth resulted from a combination of increased promotional support as well as new products launched within retailer own brand and licensed brands which partially regained prior year sales declines. The LBE growth came from new sales contracts and distribution gains for third party ranges within the French market

Sales in the Bread and Free From division continued the strong growth trend of recent years, up 14.2% on prior year to £50m, again driven by strong growth from the Genius brand and latterly retailer brands in the fresh gluten free market and the Vogel’s brand in the speciality bread market.  The joint venture established in December with Genius Foods Limited to expand the fresh bakery free from portfolio continues to offer excellent growth potential.

The company notes, however, that the challenging operating environment of the last few years continues to offer significant head winds, with consumer confidence and disposable incomes depressed for the foreseeable future. Commodity and cost inflation has been high throughout the year and again in recent months with no sign of relief. The combination of higher sales growth and savings from internal efficiency projects only partially offset these costs to date and operating margins have reduced as a consequence.

Chief executive John Duffy says, “The heavy investment of recent years has delivered sales growth though relentless commodity price inflation on basic ingredients such as butter, sugar and flour has reduced our margins. With further commodity increases, the challenge on an ongoing basis is increasingly to recover these costs by reformulation and price increases whilst continuing the growth.”