Genius gluten-free Multi Seeded Farmhouse loaf  2100x1400

Source: Genius Foods

Losses at gluten-free bakery specialist Genius Foods increased in 2022 – the same year it was acquired by German confectionery group Katjes.

Despite revenue improving by almost 6%, newly filed results for the financial year ended 31 December 2022 saw the Edinburgh-based business post a £2.4m loss from continuing operations. This followed the previous year’s losses of £1.5m.

Revenues had risen to £31.2m from £29.5m in 2021 but had been impacted by a 28% leap in the cost of sales – going from £16.5m to £21.2m in the latest accounts.

Genius cited substantial increases in ingredients, labour, energy, and shipping costs, which were accelerated by the Ukraine war in February 2022. It said it had actively mitigated the cost increases by implementing price increases, product optimisations, and establishing a 2023 cost improvement plan relating to operations costs, overheads, and re-sizing of UK sliced bread.

Further changes were made under the new ownership. The firm made the decision to exit its US business in Q3 and its Australia business in Q4, the latter which came via completion of an MBO that allowed Genius to continue being sold under licence.

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Source: Genius Foods

Smashed avocado and tomato on Genius gluten-free multi seeded toast

These strategic moves were said to enable the firm to focus on its strong market shares in the UK and Europe. It said this had driven an increase of 3.6% in UK sales compared to a 5.6% decline in 2021. Genius also went on to secure a £7.5m asset-based loan in April last year to aid its expansion ambitions, including efficiency and production improvements at its bakery site in Bathgate. It appointed former Pepsico general manager Adam Smart as its new CEO the following month.

The sale to Katjes in 2022 afforded a £11.3m gain on the redemption of preference shares. When accounting for finance, group restructuring and goodwill impairment expenses, this moved Genius to a comprehensive profit of £383,000, up from a £3.1m loss the year prior on Companies House.

An assesment by company directors concluded that there was sufficient liquidity, with additonal support from Katjes, to operate within agreed convenants and have cash flow becoming self-sustaining by July 2024 in the forecasts. 

Genius also stated it would continue to develop products and improve process technology, leveraging Katjes’ expertise in marketing and brand building to deliver revenue growth.

It supplies gluten-free bakery products including bread, morning goods, rolls and artisan loaves to all major UK supermarkets and several independent grocery retailers. In September last year, Genius relaunched its bestselling sliced loaves with a reformulated “best ever bread” recipe.