Top story

UK-listed Real Good Food (RGD) is mulling the sale of its sugar business Napier Brown.

In an update to the market this morning, the firm warned that low EU sugar prices are “continuing to make trading difficult” and that it is in “discussions with several parties in relation to a potential transaction involving Napier Brown”.

The firm said this Napier Brown deal “would enable the company to significantly strengthen its balance sheet and focus on more stable earnings growth going forward.”

Following a “very poor first half”, Napier Brown has returned to profit but remains behind expectations for the year. Real Good Food also incurred significant one-off transaction costs as well as legal costs in relation to the discussions with the UK and EU Competition Authorities.

Pieter Totté, Executive Chairman, commented: “’The difficulties in the sugar market have been covered extensively elsewhere but there are signs that prices have reached their low point and will recover over the next two years. We are examining options for our sugar business.

“Elsewhere I am delighted with performance in two areas in particular: in cake decoration, Renshaw has performed very strongly and our recent acquisition of Rainbow Dust Colours is already giving us sales opportunities both in the UK and across Europe, while in premium bakery, Haydens has continued to trade well, successfully expanding its customer base. We plan to give additional focus to these attractive sectors over the coming year.’’

Real Good Food’s share price collapsed by 17.9% in early trading to 34.5p – the shares had previously risen by around 75% since late November from a low of 23p.

Morning Update

Consumer products firm PZ Cussons (PZC) has bought out Glanbia’s (GLB) 50% stake in Nutricima, the Nigerian milk powder joint venture between Glanbia and PZ Cussons.

The deal, announced this morning, is worth £21m in cash and PZ Cussons has also entered into a new long-term agreement with Irish company Glanbia for the supply of milk-based products to Nutricima.

The Nutricima joint venture with Glanbia was formed in 2003 and now includes consumer brands such as Nunu, Olympic and Yo, which will be “further strengthened and developed under the full ownership and control of PZ Cussons”. The joint venture’s revenues, EBITDA and profit before tax for the year ended 31 May 2014 were £74.4m, £3.2m and £1.3m respectively.

Alex Kanellis, Chief Executive of PZ Cussons Plc, said: PZ Cussons is committed to the long term growth of the business and looks forward to the continued strengthening and development of its brands.

Meanwhile, vending machine specialist SnackTime said it has “now begun to feel a new level of momentum in the organisation” after a “challenging year”.

Updating the market this morning, the firm said it has a “clear focus” for 2015 of “streamlining costs, investing in technology, creating exclusive sales concepts and providing outstanding customer service”. After a year that including a protracted capital raising and bank negotiation, the board expects the EBITDA for the year to 31 March 2015 to be reduced to £550k (from £1.1m last year) on sales of £16.7m (down from £18.8m) thanks to a reduction in its William Hill contract at Drinkmaster, a decreasing vending estate and pressure on wholesale revenue.

PZ Cussons shares edged up 0.1% to 342.8p in early trading, while Glanbia shares eased 0.7% to €17.08. Elsewhere, Unilever (ULVR) continued to fall, opening 1.1% lower at 2,783p, while M&S (MKS) eased back 0.8% to 531p following recent gains.

Yesterday in the City

It was another downbeat day in the City yesterday as the FTSE 100 fell 1.7% to 6773pts having been at record high of 7,050pts just two weeks ago.

Tobacco stocks were amongst the biggest fallers as D-Day approaches over Imperial Tobacco’s (IMT) bid to buy a portfolio of cigarette brands from the merger of Reynolds and Lorillard in the US. Imperial, along with the two US firms, met with the Federal Trade Commission ahead of a decision would could come as early as this week.

Imperial was down 3.4% on investor nervousness to 2,963p, while British American Tobacco (BATS) – a significant backer of the deal – was down 3% to 3,488p.

Global fmcg stocks also retreated, with Unilever down 2.5% to 2,815p and Diageo (DGE) down 2.2% to 1,861p.

There was slightly better news for some of the sector’s retail stocks. Ahead of its annual results tomorrow, Marks & Spencer was up 1.6% to 546.4p and Tesco (TSCO) rose 0.7% to 242.5p. Outside the FTSE 100, Thorntons (THT) was up 3.5% to 70.9p and B&M European Value Retail (BME) gained 3.7% to 312.5p.

In economic news, UK GDP beat fourth quarter growth expectations by rising by 0.6%, taking 2014 GDP growth 0.2 percentage points higher than previously predicted to 2.8%, according to the ONS.

Meanwhile, GfK’s UK Consumer Confidence Index has increased three points this month to 4, its highest point for almost 13 years. Nick Moon, MD of social research at GfK, said: “Reaction to the budget has thus far been muted, but if people warm to it over the next few weeks then we may well see a further increase in the Index next month. A consistently rising Index in the run-up to the election is likely to be good news for the government.”

Topics