Real Good Food, owner of UK sugar distributor Napier Brown, is “in discussions regarding a transaction” regarding its sugar arm that would “strengthen its balance sheet”. 

It comes after Napier Brown continues to find trading “difficult” following reductions in the EU sugar market prices.

After a “very poor” first half Napier Brown has returned to profit, but has remained behind expectations for the year ending 31 March 2015, despite improved trading in the second half.

A statement said: “The company is in discussions with several parties in relation to a potential transaction involving Napier Brown. Such a transaction, if successfully concluded, would enable the company to significantly strengthen its balance sheet and focus on more stable earnings growth going forward. A further update will provided in due course.”

Pieter Totté, executive chairman, said: “The difficulties in the sugar market have been covered extensively elsewhere but there are signs that prices have reached their low point and will recover over the next two years. As stated above, we are examining options for our sugar business.

“Elsewhere I am delighted with performance in two areas in particular: in cake decoration, Renshaw has performed very strongly and our recent acquisition of Rainbow Dust Colours is already giving us sales opportunities both in the UK and across Europe, while in premium bakery, Haydens has continued to trade well, successfully expanding its customer base. We plan to give additional focus to these attractive sectors over the coming year.”

Real Good Food is a major distributor of sugar in the UK through its Napier Brown subsidiary, and manufactures a range of baking ingredients, jams and sweet bakery products. Its brands include Whitworths Sugar, Renshaw and R&W Scott.