Happy Christmas for Finsbury Foods
The firm today provided an update for the period ending December 31, with total sales revenues rising by 16% to £102M for the all-important festive season.
Experts confirmed that the growth was evenly split between the firm’s cake, bread and Lightbody Europe Joint Venture businesses. Analysts also said that Finsbury’s margins were likely to decrease year-on-year, as a result of a “challenging” trading environment.
Margins
Graham Jones, analyst at Panmure Gordon, said: “The trading environment remains challenging and as such margins for the first half of 2012 are likely to be lower year-on-year. We still expect profit before tax to increase by 16% to £2.1M and believe the firm remains on track to deliver an 8% increase in adjusted profit before tax to £6.3M for 2012.
“In line with the rest of the food manufacturing sector, Finsbury continues to operate in a challenging environment with weak consumer confidence, a sustained elevation in input costs and a very challenging retail environment.”
Finsbury confirmed that its UK cake and bread businesses saw growth of 10% and 8% respectively for the period, which accounted for just over half of the total group growth.
Lightbody Europe, the firm’s joint venture export business, provided the balance with growth of 167%, the firm revealed.
The firm also said that second half, and consequently, full year growth rates, would not be as high as the previous half as a result of European contract gains and increased promotional activity levels.
Headwinds
“The trading environment remains very tough, with the challenges of a financially squeezed shopper, and stubbornly high commodity and input price inflation,” a statement from the firm revealed.
“That said, Finsbury is continuing to invest in each of the businesses to further improve operating efficiencies, and drive growth to mitigate against these headwinds. “
Finsbury chief executive, John Duffy stressed that the firm had performed resiliently and expressed concern that soaring commodity inflation was continuing to impact on margins.
He said: “The Group has reached an important milestone, with over £100M sales in the first half. This demonstrates our resilience and more importantly the quality and appeal of our product ranges with consumers.
“Commodity inflation remains very high year-on-year and this continues to depress our already low operating margins.”
It was hard to forecast any improvement in this in the short term, added Jones.
“However, management and staff are committed to deliver on our twin strategy of growth and continued efficiency investment to ensure our continued success in this difficult market place."
