LONDON (Alliance News) - Real Good Food PLC shares plunged lower early Wednesday as the company said it expects its earnings for the year to the end of March to be significantly behind market expectations as its divisions were hit by weak EU sugar prices.
The company said the fall in EU sugar prices has meant trading in its Napier Brown and Garrett Ingredients businesses has been very difficult. Napier Brown returned to profit in the second half, it said, but remains behind expectations for the year.
Real Good Food said it is currently in talks with several parties about a deal the sale of Napier Brown. It said the deal would help to stabilise its balance sheet and to produce more predictable earnings growth going forward. It said it will provide a further update in due course.
The company said the group outside of Napier and Garrett performed ahead of expectations, with its Renshaw and Haydens businesses both performing well.
It did add, however, it has incurred significant one-off transaction costs and legal costs in relation to its talks with the UK and European competition authorities regarding the complaint the company made about Associated British Foods PLC's British Sugar business.
"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. As stated above, we are examining options for our sugar business," said Pieter Totté, Real Good Food's executive chairman.
Shares in the company dropped heavily in early trade, down 18% to 2.05 pence to be one of the worst performers in the AIM All-Share.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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