New business wins, gluten-free bakery and NPD from licences including Harry Potter have helped drive growth at Finsbury Food Group.
Group revenue at the bakery manufacturer is up 4.7% to £159.4m for the 26 weeks to 28 December 2019, it revealed in its unaudited interim results. This was predominantly driven by its UK bakery division, which saw sales grow 5.8% to £141.2m, while overseas revenue fell by 3.5% to £18.2m.
The UK’s performance was driven by new business wins, as well as organic growth. It also benefited from the full half-year of free-from business Ultrapharm which it acquired in late 2018.
“The first half was both a period of growth and of successful delivery against our strategic priorities. Revenue and profit were up, largely driven by organic performance in UK bakery, as well as new business wins and the first full six-month contribution from our free-from business. We made encouraging progress in the optimisation of our cash flow in the period and reduced our debt levels and are pleased to announce a further increase in the dividend,” said CEO John Duffy.
However, the UK bakery operating profit margin decreased slightly from 5.5% to 5.4% over the period and was 5.1% for the whole of 2019. Finsbury said the bakery sector continued to face commodity headwinds, now led by flour, as well as continuing labour inflation ahead of CPI, driven by the National Living Wage, significant utility inflation as a consequence of Government green levies and general inflation. All of these, the business said, had “necessitated and will continue to necessitate cost mitigation strategies and inevitably price recovery from customers”.
Other strategic highlights for Finsbury – which has UK manufacturing sites in Cardiff, East Kilbride, Hamilton, Salisbury, Sheffield, Manchester and Pontypool – include implementing a group-wide review and standardisation of bakery processes leading to improved quality and waste reduction. It also opened a new gluten-free bakery in Poland to expand capacity for the continental market.
The launch of a Harry Potter licensed range, which included celebration cakes and cupcakes, was also highlighted. NPD was a focus for the business in 2019, with a number of new characters added to its range, as well as the expansion of its Mary Berry portfolio.
Next in Finsbury’s NPD pipeline is a vegan range of cakes, due to be launched in the coming months.
"We’re going to launch a new licence with Bosh!, who are a couple of young chaps from Sheffield. They’re vegan social media stars who do everything from cookbooks to YouTube to TV on a Sunday morning... We’re working with them on a range of cake products," Duffy told British Baker.
Finsbury remained positive for the future, stating that it was now a “much more resilient business and better equipped to weather difficult trading conditions”.
“The broad channel, customer and product diversification we now have in the business gives us a solid platform on which to build and we continue to benefit from access to higher growth opportunities such as free-from and consumer niches such as artisan bread,” Duffy added.
“Notwithstanding the ongoing market-wide headwinds, there is positive sales momentum in the business and a growing number of exciting opportunities that give us confidence in Finsbury’s prospects for the full year, which remains in line with expectations.”