A doughnut line at a Baker & Baker factory

Source: Baker & Baker

Sales at sweet treats manufacturer Baker & Baker have risen by 8.3% over the past year, but significant input cost increases forced the British arm of the European bakery supplier into the red.

In its annual results for the year to 31 December 2022, Baker & Baker Products UK saw revenue increase from £205.9m to £223m.

Nevertheless, due to a sustained rise in costs relating to both raw materials and energy, it ended the year with a £4.3m operating loss – a stark contrast to the £3.5m profit recorded in 2021. The dramatic drop from profitability echoed that seen by fellow British baking giants Hovis in its latest results, while Warburtons also had its margins take a major hit from inflation.

A Baker & Baker spokesperson described their underlying business performance during the period as “robust”, noting it had demonstrated “considerable resilience in a strongly inflationary environment”. This was said to be largely driven by macroeconomic developments related to the war in Ukraine. “These results represent our UK business, which forms less than half of our overall group volume,” added the spokesman.

The company had also incurred one-off anticipated exceptional costs including those associated with the sale and separation from the previously integrated ingredients business, now known as CSM Ingredients. To allow shareholders to gain a clearer understanding of its UK trading performance, the company reported an adjusted EBITDA of £14.8m for 2022 (down 7.1% from the previous year), which excludes the “impact of significant non-recurring items”.

Baker & Baker noted a focus on bakery segments such as American sweet bakery had allowed it to continue to maximise growth opportunities. Strategic licensing agreements also continue to drive strong growth across key markets, it said, with brand collaboration NPD launched earlier this year including Cadbury Crunchie Doughnuts and the Cadbury Dairy Milk Chocolate & Orange Cookies.

Baker & Baker UK headquarters in Bromborough, the Wirral.

Source: Baker & Baker

Baker & Baker UK headquarters in Bromborough, the Wirral

The business, which has its UK headquarters and biggest manufacturing site based in the Wirral, attempted to mitigate the inflationary impact via pass-through price increases to its retail and foodservice customers. Its 2022 results showed volume had actually decreased by 8.6% to 69,905 metric tonnes compared to the 76,453 tonnes sold in 2021.

Baker & Baker said its UK business remains on plan to deliver an improved set of results for the current financial year, as it grows both its customer base and product volume. Operations of the international group are spread across 11 sites in seven countries, with approximately 2,500 employees in total.