Finsbury Food’s UK sales fall 2.9% as pound drops

20-Jan-2017 - Last updated on 20-Jan-2017 at 11:00 GMT

Finsbury Food's UK sales fall 2.9%

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Speciality cake and bread manufacturer Finsbury Food Group reported “solid trading” in its half-year financial update, despite UK sales falling by 2.9%.

Total group sales remained flat at £156.6M over the six months to December 31, it reported. Its European business – Lightbody Stretz Ltd – reported 31.7% growth.

Finsbury’s annual forecast remained in line with management expectations. It blamed the weak value of the pound on the UK sales drop.

A Finsbury Food statement said: “The board is pleased to report that since the Annual General Meeting trading update in November 2016, trading has continued to be solid throughout the Christmas period.

‘UK Bakery division declined’

“The UK Bakery division declined by 2.9%, against a backdrop of UK retail food market deflation in the period, whilst the Overseas division, the group's 50% owned European business, grew by 31.7% continuing to demonstrate the strengths of our strategic diversification.”

The cake manufacturer invested a record £5M on innovation and efficiency schemes over the six months. Continual investment was an important strategy for overcoming the “challenges of sterling induced commodity inflation and planned national living wage increases,” it said.

Finsbury warned that further cost recovery would be required, due to increased costs.

Improve shareholder value

The firm was well-placed to maintain its position, after “exceptional growth and diversification over the prior years”, despite the challenging market conditions. The board believed it was “well-equipped” to continue delivering growth and improve shareholder value over the coming years.

Finsbury had reported a 4% drop in UK sales in the first four months of the financial year, in November. The company recorded £55.1M in sales over the past two months.

It said at the time that input costs had risen significantly.

“Whilst consumer confidence has remained stronger than anticipated, input costs, which are globally priced in dollars or euros, have increased substantially following sterling’s weakness,” the company said.

“The group has been able to respond to these challenges by modifying promotional activity whilst also reviewing potential opportunities for reformulation changes to minimise the on-cost and maintain affordability of our great products for customers.”