26 Jan 2010 07:00
The Real Good Food Company plc (AIM: RGD)
Pre-Close Trading Update
The Real Good Food Company plc ("Real Good Food" or "the Group"), is a supplier of sugars and bakery ingredients and a manufacturer of bakery products.
The past year has seen the Group make considerable progress in addressing key operational and financial challenges. Under the guidance of a new senior management team, Real Good Food has managed to significantly reduce its bank borrowings from £29.1m to £21.3m at the period end, and improved its sales performance in retail sugar, baking ingredients and at its bakery division, Hayden's.
Following significant investments in new capacity and automation over the past three years, retail sales of sugar hit record levels in 2009, driven by increased market share and development of the discounter sector and pushed factory utilisation to some 65%, on a 24/7 shift basis, for the year. This was helped by several new contracts, and growth in the home-baking market.
Sugar sales to small industrial customers increased strongly in the second half of 2009 and the launch of a new Whitworths 25kg Pure Cane Sugar product this month is designed to build on this progress, with further investment in flexibility of pack format planned for 2010 to promote growth in the medium term. In addition, the business also continues to develop its added value sugars, sourcing a range of specialist, organic and fair trade products for both retail and industrial customers.
Bulk sugar sales reduced slightly as a result of market weakness, following the final phase of the EU Sugar Regime changes in October. However, a number of new bulk sugar contracts have already been gained for 2010.
2009 saw a resurgence of home baking and crafting, driving growth in both export and domestic markets, helping the ingredients business successfully recover and mitigating key commodity cost increases. A company-wide Innovations team has been established to increase both focus on research to understand consumers and to drive investment in product development and innovation.
Hayden's, the Group's Bakery Division, achieved significant growth in sales to all three of its major customers - Marks & Spencer, Waitrose and Costa Coffee. Overall sales increased by 15%, with double-digit growth achieved at all major customers. Food service sales, which only started in 2008, grew to account for almost 10% of total revenues.
A successful new product development programme at Hayden's led to the launching and re-launching of 29 products during the key launch window in October. Mince pie sales for Christmas reached record levels with over 1.5 million pies produced for the festive period (64% up on 2008). The management team, led by Managing Director, Paul Smith, is now overseeing a major investment in the business to double its size over the next four years.
As a result of this strong progress at all its business units, the Group expects to report profits before taxation and exceptional items for the year ended 31 December 2009, which are around 25% above current market expectations. Real Good Food expects to announce its preliminary results in mid-March.
Pieter Totté, Executive Chairman, comments:
"I am delighted by the progress we have made over the past year in developing new sales, expanding our product ranges and broadening our customer base. After a strong start to the current year, it gives me confidence that we are well placed to build on this progress."
26 January 2010
ENQUIRIES:
| The Real Good Food Company plc | Tel: 0151 706 8200 |
| Pieter Totté, Executive Chairman | |
| Mike McDonough, Finance Director | |
| Shore Capital | Tel: 020 7408 4090 |
| Guy Peters | |
| College Hill | Tel: 020 7457 2020 |
| Gareth David |