Finsbury Food Group – which last month announced plans to close its Grain D’Or bakery in London – has said its focus on driving efficiency and scale has helped it weather challenging market conditions.
Group like-for-like revenue rose 0.3% to £314.3m, with adjusted EBITDA up 2.7% to £24.9m, the bakery business announced today in its preliminary results for the financial year ended 1 July.
Finsbury said it had faced challenges including a deflationary market, with growth in discounter market share and online retail as consumer shopping habits change, in addition to cost increases driven by a weak sterling, commodity fluctuation and the national living wage.
Finsbury, which produces a wide range of licensed products (see below), said it had worked with its brand partners and customers to revise prices, products and promotional ranges.
“These are difficult customer conversations and while diminished promotional spend reduced sales growth in the short term, operating margin was successfully maintained in conjunction with our internal efficiency improvement initiatives and recent capital investment,” said CEO John Duffy.
The company’s £12.5m capital spend has included the installation of a new automated whole cake line in an upgraded bakery at its Cardiff site, which will go into full production in the current financial year. Finsbury has also opened a new artisan bread bakery at its Salisbury site.
Further investment has been in the standardisation of process across all sites to establish best practice, followed by the roll-out of new integrated management software across the group.
The company added it intended to continue to invest in new plant, equipment and systems to further improve efficiency, product quality and sustainable manufacturing.
Referring to plans to close the loss-making Grain D’Or pastry factory, Duffy said that despite efforts to stem losses, ongoing pressures from commodity and labour cost increases had made it difficult to maintain customer contracts.
He added that Finsbury had continued to explore acquisition opportunities, but that none had been successful in the past year, as valuations had remained “unrealistic” given the market headwinds.
“More challenging market conditions may provide new acquisition opportunities in the year ahead and we remain patient,” said Duffy. “Meanwhile, there are ample opportunities identified to further strengthen and optimise our current group businesses.”
Thanking his colleagues across Finsbury for their “continued commitment”, Duffy added: “The business environment isn’t going to get any easier, but I remain confident Finsbury has the right people, investment approach and M&A strategy to deliver growth in the years ahead.”
Finsbury brands and licences in FY17
Kara: This has been a year of consolidation for the foodservice business after several consecutive years of growth, reported Finsbury, with revenue marginally up on last year. New business has been secured on cake ranges with two major UK wholesalers, as well as cafés and pub groups. Traditional doughnuts continued their renaissance, said the company, and artisan bread products continued to grow in sales and outlet penetration.
Thorntons: Finsbury recently completed the renewal of its long-standing partnership with Thorntons.
Mary Berry: Finsbury launched a Mary Berry cake range this spring.
Character licensing: Successful licences for Finsbury this year have included Batman v Superman, Minions, Star Wars and Emoji – all linked to big movie releases – and well-established names such as Me to You, Peppa Pig and Paw Patrol.
Disney: Finsbury recently relaunched its Disney celebration cake range with a reduced sugar recipe, and the new range is the first in the UK to launch with Disney Kitchen branding.
Village Bakery: The Loyal range of rossisky and seeded rye breads is being extended with a pumpernickel rye loaf made with molasses and a blend of kibbled ryes to give a sweet and sour flavour.
Cranks: The stoneground wholemeal loaf will be joined by the new Cranks organic wholemeal seeded loaf.