LONDON (Alliance News) - The Real Good Food Company PLC Tuesday said several of its business recorded earnings growth for the third quarter, and it has now managed to address the dramatic reduction in sugar prices, hoping that its sugar profit margin will be fully restored during the course of this year.
The baker and sugar producer said trading in the third quarter, the period from October 1 to December 31, 2013, proved to be mixed, with "challenging" market conditions for the food sector.
"The instability in the sugar market is giving us short-term challenges, but our strategic plans in this market remain sound," said Executive Chairman Pieter Totté in the group's trading update.
The group said it has made good progress in addressing low sugar prices, with a number of new supply sources secured in the past three months, and it expects sugar profit margins to stabilise later this year.
Real Good Food said three of its businesses, including Renshaw, R&W Scott and Haydens, recorded year-on-year growth in earnings before interest, taxes, depreciation and amortisation.
"The investments which we have made in increased sales and marketing resources were designed to transform our businesses from being manufacturing-led to market-led and underpin our growth strategy," said Totté.
Totté said that the strategy is now beginning to bear fruit, as volumes are showing good growth at Napier, Renshaw and Haydens. Totté also said the group has now recruited sales and marketing teams to deliver similar momentum at R&W Scott and Garrett Ingredients.
Real Good Food said sales at Napier Brown, its non-refined sugar distributor, have increased significantly in both the industrial and retail sectors, although trading has inevitably been hit by the reduction in sugar prices.
It said trading at its dairy ingredients business, Garrett Ingredients, also was knocked back by the instability in the sugar market during the period, and while contribution from Dairy ingredients showed growth in the early part of the year, recent market conditions have been challenging. It said that this, alongside some some increased costs associated with a management re-organisation, will hold back full-year results.
At Renshaw, its baking ingredients business, Real Good Food said its investment in sales and marketing is now beginning to pay dividends, and anticipates reporting a significant increase in earnings before interest, tax, depreciation and amortisation for the year.
It also said earnings at Haydens, its patisserie and desserts business, is anticipated to increase year-on-year, boosted by sale growth and an increase in its customer base.
In a separate statement, Real Good Food said it has appointed Gino De Jaegher as chief operating officer, with immediate effect. De Jaegher is a former British Sugar managing director.
Shares in Real Good Food were down 1.9% late Tuesday morning at 64.00 pence per share.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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