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Sales and profits have slumped at Finsbury Food Group as the cake maker experienced unprecedented demand swings as the coronavirus outbreak hit the UK.
However, chief executive John Duffy hailed the resilient performance of the bakery group.
Revenues at the business fell 2.8% to £306.3m in the year ended 27 June 2020, with growth in the first three quarters brought to a halt by the pandemic and subsequent lockdown.
Finsbury’s retail business remained “relatively resilient” throughout the crisis, while foodservice and food-to-go were hardest hit.
Adjusted EBITDA declined 4.4% to £24.4m and adjusted pre-tax profits fell 12.9% to £13.9m.
After exceptional costs of £10.3m, partially linked to commissioning a new Polish bakery, pre-tax profits slumped to £2.9m, compared with £13.6m in the prior year.
“The first three quarters of the financial year saw the group perform in line with market expectations as the benefits of our long-term investment programme and operating initiatives continued to bear fruit,” Duffy said.
“The outbreak of Covid-19 saw unprecedented demand swings and resulted in a challenging period for the group, but I am proud of how we responded and were able to play a part in ensuring the UK’s supermarkets had the food stocks needed at the time.”
Duffy added, Finsbury had experienced month-on-month improvement since the outbreak, which continued into the new financial year.
“Our teams have worked hard in recent years to build Finsbury into a more resilient business, and there is no doubt those improvements were a key factor in enabling us to remain strongly cash generative throughout the period.
“We remain focused on becoming a leading speciality bakery group and, notwithstanding coronavirus-related disruption, we have continued to make good progress towards that goal. There will inevitably be further obstacles to overcome as the pandemic plays out and with Brexit approaching, but there is a sense of cautious optimism in the business, and we are confident that by continuing to manage the business in a disciplined and pragmatic way, we will emerge a stronger, more streamlined and efficient organisation capable of delivering sustainable growth and healthy returns for shareholders.”
Shares in the group fell 3.2% to 55.2p as markets opened this morning, with investors worried about the affect of potential new coronavirus restrictions.
Morning update
The FTSE 100 slumped 2.4% to 5,863p this morning as fears mounted over the impact of another lockdown in the UK.
Foodservice, pub, food-to-go and retail stocks have been hammered by the early sell off, with Marston’s down 8.3% to 42.7p, SSP Group down 6.4% to 183.6p, WH Smith down 5.6% to 1,030.8p, Greencore down 5.3% to 104.2p and Greggs falling 4.8% to 1,153.2p.
Ocado and B&M European Value Retail were two early risers, climbing 2.3% to 2,882p and 1.5% to 462.7p respectively.
Ultimate Products has appointed former Tesco executive Jill Easterbrook to its board as the co-founder of the consumer goods group steps down.
Easterbrook and Christine Adshead joined the company as non-executive directors today.
At the same time, Barry Franks, the company’s co-founder and a non-executive director, will step down from the board but will remain in the business as president in recognition of his “outstanding and continuing contribution” to Ultimate Products since its inception in 1997.
Easterbrook was previously the CEO of fashion retailer Boden, having formerly worked at Tesco for 16 years in a variety of senior roles including group business transformation director, chief customer officer, managing director of UK and ROI clothing and group strategy director. She started her career in merchandising for Marks & Spencer, and also worked for four years as a management consultant for Cap Gemini Ernst & Young.
Christine Adshead is a former partner at PwC, where she spent almost 20 years providing transaction advisory services across a range of corporate activities and a variety of sectors, including retail and consumer goods.
Barry Franks has been a non-executive director of Ultimate Products since 2005, having invested in the company alongside CEO Simon Showman when it was founded in 1997.
Chairman Jim McCarthy said: “We are very pleased to be welcoming two board members of Jill and Christine’s calibre to Ultimate Products. Jill brings with her a hugely relevant skillset from her many years of working for some of the biggest names in UK retail, whilst Christine’s long career in senior advisory positions will be invaluable. We look forward to benefitting from their outstanding track records in a variety of leadership, strategy, advisory and operational roles.
“It is impossible to overstate the contribution that Barry has made to Ultimate Products, from his role as co-founder and mentor to Simon Showman in the early days of the company to his financial backing of the buy-out of LDC’s investment in 2014. We are delighted that the company will continue to benefit from his expertise in his new role as president.
“On behalf of the board, I would like both to warmly welcome Jill and Christine, and to express our heartfelt gratitude to Barry.”
First-half sales at Gusbourne have jumped 24% to £890,000 as the English sparkling wine producer benefited from significant growth in direct-to-consumer and export channels during the Covid-19 crisis, offsetting the impact in the traditional UK trade channels.
Adjusted EBITDA losses shrank slightly in the six months to 30 June to £603k, compared with £609k a year ago. However, pre-tax losses widened to £1.6m from £1.1m.
Charlie Holland, chief winemaker and chief executive, said: “We are delighted to report year-on-year revenue growth of 24% over the last six months, despite the challenges presented by Covid-19. We intend to continue to produce and sell a range of vintage wines of exceptional quality from grapes grown in our own vineyards, and to further grow and develop the business in a manner which remains consistent with the aspirations for the Gusbourne brand.
“Warm spring weather led to an early and successful flowering indicative of good yield potential. Less intensity of warmth as we entered the ripening period will slightly lengthen the time to harvest allowing for the complexities of flavour to mature. The prospects for the quality of the grapes, which are due to be harvested shortly, remain high as in previous years.
“Current trading reflects continuing sales growth combined with the careful management of costs and liquidity. We remain confident about the long-term prospects of the business.”
Town Centre Securities, the regional property investor and car park operator, has sold four retail properties in Scotland and London for a total sum of £35.2m. The units sold comprise of two Waitrose stores in Milngavie and Glasgow; an Aldi/Home Bargains store in Milngavie; and a high street retail store in Chiswick, London. The details of the sales are as follows:
Edward Ziff, chairman and chief Executive of TCS, said: “These disposals represent an acceleration of our strategy to reposition TCS’s portfolio; reducing our retail exposure, and enabling a significant reduction in bank debt.
“We have successfully navigated an extremely difficult period as a result of the COVID-19 disruption, and have continued to receive high levels of rent receipts. That said it has become increasingly clear that we need to reset and reinvigorate the business. These disposals represent the beginning of that process.
“Reducing indebtedness and increasing headroom for growth ensures TCS is better placed to move forward beyond the current period of uncertainty.”
Universe Group is seeking a new finance director after Daryl Paton decided to step down to pursue a new career opportunity. Paton will remain with the company until his successor is appointed and for a short period thereafter to ensure a smooth handover. The fintech company, which works with retailers and forecourt operators, has commenced a search for his successor and a further announcement will be made in due course.
Chief executive Jeremy Lewis said: “I would like to thank Daryl for his contribution to Universe over the past three years and we respect his decision to leave to pursue a new opportunity. He is remaining with the company to ensure an orderly handover of his responsibilities and I look forward to announcing the appointment of his successor in due course.”
This week in the City
Company results continue this week with Irn-Bru maker AG Barr to report its first-half figures tomorrow, followed by full-year numbers from PZ Cussons and Origin Enterprises on Wednesday.
General Mills will also update on its first quarter this week.
In wider economic news, tomorrow brings public sector net borrowing numbers along with the latest CBI Industrial Trends surveys. Friday will see the latest GFK Consumer Confidence index.
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