Finsbury shrugs off dioxin scare as cake growth returns
The firm announced group revenues up 6% to £87.8m for the six months ending January 1 2011, with profit before tax up 3% to £1.9m; this compares with figures of £82.9m and £1.8m for the first half of 2010.
Duffy (pictured) said:“We have seen strong growth in bread and free-from, and perhaps more encouragingly, the return to growth of our cake division.
“Although we are adopting a cautious approach with the trading environment as it is, we look forward to exploiting the growth opportunities available to us…in the coming year.”
Cakes need promotional support
Cake sales hit £64.2m (up 3%) in the first half of 2010/11, which reverses the 9.7% sales decline Finsbury saw in the year to June 30; both the UK and export markets saw strong growth, the firm said, although the former required promotional support to remain competitive.
Bread and free from sales of £23.6m saw Finsbury post a 14% increase against the first half of last year, driven by strong growth in the fresh gluten-free market from the Genius and Vogel’s brands.
Nonetheless, the firm said the last six months had been difficult: “Our operating environment is constantly evolving but continues to be very challenging with commodity price and cost inflation pressures on one hand and fragile consumer confidence impacting spending on the other.”
Egg dioxin scare
Finsbury admitted that the German liquid egg dioxin scare affecting its Memory Lane cake business meant a “challenging start” to the second half of the financial year.
“Although the products were safe to consume, retailers removed cakes from shelves as a precautionary measure. The fact that there was no public health risk has led our insurer to deny recovery of any associated withdrawal costs,” the firm said.
“We continue to work with retailers and the egg supplier to resolve the issue and address the recovery of costs required.”
A spokeswoman told FoodManufacture.co.uk that the matter had not progressed significantly since Finsbury revealed in late January that it was involved in a spat with insurers over a pay-out to cover withdrawl costs, adding that the quantity of the claim had not yet been determined, given delays from some retailers in providing information about the number of cakes withdrawn.
Trading since January 1 in line with expectations saw cake sales 6% ahead of the same period last year, while bread and free-from grew 5% on a like-for-like basis.
However, despite predicting higher profitability in the second half year due to Easter sales, Finsbury said it did not expect any respite on rising commodity costs: “Pressure is increasing, and with this in mind we continue to work on internal efficiency and productivity initiatives to minimise price rises required.”
