6 Oct 2017 07:00
Date: | 6 October 2017 |
On behalf of: | Finsbury Food Group Plc ('Finsbury', 'the Company' or 'the Group') |
For immediate release | |
Finsbury Food Group Plc
Closure of Grain D'Or and Trading Update
Finsbury Food Group Plc (AIM: FIF), a leading UK speciality bakery manufacturer of cake, bread and morning goods for both the retail and foodservice channels, announces that further to its announcement dated 23 August 2017, a decision has been made to close the Grain D'Or factory.
The closure, which is anticipated to be completed by 2 December 2017, means that the Company will benefit from not supporting the losses associated with the factory. This fits with the Company's strategy of focusing investment behind profitable product niches to drive long term market growth and value within specialty bakery.
Grain D'Or has been historically loss making and for the 12 months ended 30 June 2017 it reported an operating loss of £3.33 million on revenues of £28.5 million. Due to the products it produces, Grain D'Or trades in a particularly competitive environment which creates strong competition for contracts and loss-leading pricing. With this in mind, and together with the cost issues being experienced across the industry, Grain D'Or has lost two large contracts since the year end, impacting its financial performance further. The Company believes the exceptional cash costs associated with the closure of Grain D'Or could reach up to £10 million, spread over a period of up to seven years, but expects it more likely to be in the region of £6 million. The Company will benefit from the cancellation of planned capital investment programmes in Grain D'Or, which were significant.
The Board's expectations in relation to its financial performance for the year ended 30 June 2018 remain consistent with the guidance previously delivered to the market, albeit that the adjusted profit performance* will be achieved from a lower revenue base. This can be attributed to the temporary increase in butter prices which the Board believes is likely to recede in subsequent financial years. Finsbury's recent statements for the full year to June 2017 demonstrated its resilience in a challenging market. This robust result was achieved thanks to the significant investment it has delivered over the past four years. Following the closure, the Company's lower cost base and greater focus on profitable markets means that it is well positioned for future growth, despite current market conditions, and to benefit from any future upturn in the market. The Company will continue to invest in support of its strategy to drive efficiency and profitable scale and is confident that it is well-placed to maintain its leading position in the market.
* adjusted profit relates to profits reported after the exceptional costs of closing the Grain D'Or factory.
This announcement contains inside information.
- ENDS -
For further information: | |
Finsbury Food Group Plc | www.finsburyfoods.co.uk |
John Duffy (Chief Executive) | 029 20 357 500 |
Stephen Boyd (Finance Director) | |
Cenkos Securities plc | |
Bobbie Hilliam (Corporate Finance) | |
Redleaf Communications | finsbury@redleafpr.com |
Elisabeth Cowell | 020 7382 4730 |
Fiona Norman | |
Ian Silvera |
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Notes to editors:
§ Finsbury Food Group Plc (AIM: FIF) is a leading UK manufacturer of cake and bread bakery goods, supplying a broad range of blue chip customers within both the grocery retail and 'out of home eating' foodservice sectors including major multiples and leading foodservice providers.
§ The Company is one of the largest speciality bakery groups in the UK and, with its Overseas division, has sales in the financial year ending 1 July 2017 exceeding £300m.
§ The Company's bakery product range is comprehensive and includes:
o Large premium and celebration cakes.
o Small snacking cake formats such as cake slices and bites.
o Artisan, healthy lifestyle and organic breads through to rolls, muffins (sweet and savoury) and morning pastries, all of which are available both fresh and frozen dependent on customer channel requirements.
§ The Company is one of the largest ambient cake manufacturers in the UK, a market valued at over £938 million (source: Symphony IRI, 52 w/e 19th August 2017). The annual retail bread and morning goods market has a value of £4.0 billion (source: Kantar Worldpanel 52 weeks to 16th July 2017). The UK foodservice bread and morning goods bakery sector is worth approximately £836 million per annum. The UK foodservice cake and sweet treat bakery sector is worth approximately £494 million per annum (UK foodservice data derived from NPD Crest 52 w/e 30th June 2017).
§ The Company comprises a UK Bakery division and an Overseas division:
o The UK Bakery division has manufacturing sites in Cardiff, East Kilbride, Hamilton, Salisbury, Sheffield and Manchester.
o The Overseas division comprises the Company's 50% owned company, Lightbody Stretz Ltd, which supplies and distributes the Group's UK-manufactured products and third party products, primarily to Europe.