LONDON (Alliance News) - The Real Good Food Company PLC Thursday it will now take up its pricing complaint about the sugar subsidiary of Associated British Foods PLC with the European Competition Authorities in Brussels, and said it has now negotiated two new supply contracts, which it hopes will stabilise its sugar business going forward.
The baker and sugar producer is currently in a pricing dispute with British Sugar, AB Foods' sugar business, which took a nasty turn in February when British Sugar temporarily withdrew the supply of sugar to Napier Brown.
British Sugar, is a major supplier to Real Good Food's sugar distribution business, Napier Brown. However, Real Good Food had complained to the UK Competition and Markets Authority that British Sugar is in breach of EU competition laws, alleging an abuse of a dominant position by British Sugar.
On Wednesday, the company issued a statement saying that the Competition and Markets Authority told them that the pricing complaint made by its sugar business and also its largest business, Napier Brown, against British Sugar, has not passed the UK regulator's prioritisation procedure. As a result, conducting a full investigation could take at least two years to conclude, it said.
Last month, the company said it swung to a loss in its last financial year, after it said trading was hit by its sugar pricing dispute, which caused several of its profit-making businesses to record a loss.
"We are extremely disappointed that the Regulatory Authorities here in the UK have decided not to prioritise this case, and we will now take up the matter with the European Competition Authorities in Brussels," said Chairman Pieter Totte in a annual general meeting statement Thursday.
Real Good Food said Thursday that it has now negotiated two new supply contracts; a major supply contract with Suiker Unie in Holland, and another contract for a "significant quantity" of can sugar from Mauritius starting from 2015. The company said both deals will utilise its new Stallingborough import facility.
"These supply deals and sales successes give our sugar business some stability going forward," said Totte.
Real Good Foods said that trading at Renshaw, its bakery ingredients business, and Haydens, its sweet bakery products manufacturer, are both trading positively, with signs of earnings growth in the first half of the year.
"Both businesses showing significant EBITDA [earnings before interest, taxes, depreciation and amortisation] growth in the first half of the year, which will go some way to mitigate the effects of the uncompetitive British Sugar price which continues until the end of this September," said Totte.
Shares in Real Good Food were trading flat Thursday morning at 31.00 pence.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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AB Foods (ABF)