Gluten-free bakery brand Genius Foods fell even further into the red in 2023 with its latest annual results showing an operational loss before tax of £3.2m.
The Edinburgh-based manufacturer had previously posted a loss of £2.4m in 2022, the same year it was acquired by German confectionery group Katjes Greenfood, which followed a £1.5m loss from 2021. The last time saw profitability from operations was in 2020, when it ended £26k up.
While revenue had improved by 6% in 2022, Genius reported a 5.3% dip in sales to £29.6m in its filing on Companies House for the year ended 31 December 2023. The company said the downturn was driven by increased focus on UK markets and a planned reduction in sales to overseas markets.
Genius noted that its latest loss had arisen from continued raw material price pressure in the first six months of the year, and the board’s decision to increase marketing expenditure in the second half of 2023 to attract new consumers into the sector, including relaunching its sliced loaves range with a new “best ever bread” recipe.
There were also costs associated with the restructure of the senior leadership team. It appointed former PepsiCo Ireland GM Adam Smart as CEO in May 2023, who has since stepped down and been replaced by Stephen Hann from the start of this year.
The business revealed that UK retail of its ranges of gluten-free loaves, rolls, buns, crumpets, pies, muffins, pancakes, brownies, teacakes, and pastry had declined by 4.5% in 2023 (compared to a 3.6% rise the year prior). This was attributable to the directors’ decision not to participate in increased levels of promotional support with a retailer and resulting decrease in distribution, it said.
Accounting for exceptional items, the loss before tax in 2023 came to £3.7m. Genius had recorded a pre-tax profit of £203k in 2022, which it said arose primarily from the gain on redemption of £11.3m on preference shares following the sale to Katjes, after adjusting for group restructuring costs, impairment of goodwill, and interest paid on shares. The Katjes group advanced £2.8m from shareholder loans to Genius during 2023, and has given a further £4m loan since the start of 2024 as well as agreeing a convertible loan facility of £5m last December.
Genius said there are procedures in place to pass price rises onto customers – the extent of which will depend on inflationary impact – and deliver profit improvement initiatives across the business.
“The FMCG industry has seen its fair share of turbulence over the last five years, from inflation to supply chain pressures,” commented Hann. “Despite this in 2023, Genius significantly increased its marketing investment.
“2025 is set to be a transformational year for us. Supported by our family-owned majority shareholder, Katjes Greenfood, we are leveraging our founding strengths: innovative, great tasting, gluten free bakery products that improve lives,” added the CEO.
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