Savoury pastry specialist Higgidy has slumped to a loss before tax of £3.4m in its latest financial year, primarily due to the impact of inflation and disruption from its site expansion.
The company announced a £10m investment to increase capacity at its Shoreham-by-Sea facility last year with majority shareholder Samworth Brothers also upping its stake in the business, which supplies premium branded pastry products including quiches, pies, and rolls to major UK retailers.
Having recorded £1.8m profit recorded during the previous financial year, the leap in capital expenditure and raw material costs saw Higgidy sink to a loss in its accounts for the 15-month period to 1 January 2023.
Sales for the period had risen by over a fifth (21.4%), up to £43.3m from the £36m reported in FY2021. However, the business noted that this revenue increase was largely down to the change in accounting reference date, as the comparative term had been over 12 months prior.
On a like-for-like basis, Higgidy’s volume experienced a slight decrease due to the impact of the cost-of-living crisis, citing evidence that consumers were trading down to own-label alternatives. It also revealed that volume had been constrained in peak summer months last year by the bakery expansion, which was completed in September 2022.
Despite securing some price increases with customers, the company had absorbed some of the inflation of input costs, which had eroded gross profit margin down to 27.3% from 34.1% in the previous financial year.
“The site development during 2022 was an exciting year for us, however the change in the economic climate happened at the same time and inevitably led to some delays and challenges,” commented Higgidy CEO Rachel Kelley. ”We are now well set to innovate and bake our veggie-led portfolio in future years.”
In addition to sales and gross profit, Higgidy directors said they monitored staff numbers as a key performance indicator, with the average workforce increasing by 12 up to its latest total of 340.
“As a business, we look to engage and motivate our staff with our culture and invest in training and development to help our staff realise their full potential,” it stated in strategic report. “This allows the business to maintain labour stability that is so important in producing our quality products, together with providing excellent customer service.”
The manufacturer highlighted new product innovation and recipe development as fundamental to its growth. It recently reformulated two of its savoury mini muffins with Wildfarmed regenerative flour, and unveiled new pies and rolls alongside a marketing campaign starring comedian Judy Love entitled ‘Dig Into A Higgidy’. Its new snacking lattices were also launched earlier this year, with the Sweet Potato Katsu Curry version going on to be named a finalist in the Free-from Bakery Product of the Year category at the Baking Industry Awards 2023.
Among other key decisions from the financial period listed by the B Corp-accredited company were continued purchase of renewable grid-supplied energy and carbon foot-printing carried out to develop its net zero pathway, a slight increase of waste recycling rate up to 83.6% (with zero waste sent to landfill), and an evaluation of single-use plastic reduction opportunities with the target of 2025 for 100% recyclable packaging across the product range.
Conceding that the food sector remains highly competitive with consumer eating habits continuing to evolve, Higgidy said it expected 2023 to be a challenging year for the brand. However, the board remained optimistic about the future as it looked to working with customers on inflation recovery and cost mitigation. “We are targeting an increase in sales through new product development and gross margin improvement from bakery efficiency projects to reduce the loss before taxation,” it added.
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