Revenue for Real Good Food (RGF) has risen 9% over the last year but Omicron, costs and shortages impacted the group’s performance in H2, a trading update has revealed.
The cake decoration specialist’s figures for the 12 months up to 31 March 2022 show sales worth £40.5m and EBITDA just under £0.7m compared with £0.2m for the previous year. This resulted in a loss before tax of £2.8m, showing improvement on 2021’s loss of £6.1m. However, the performance overall was ‘below that which the board had anticipated exiting the half year’, the group said.
Revenues during the third quarter (October to December 2021) – the group’s seasonally busiest period – were ‘disappointing and well below expectations’ due to severe shortages and erratic deliveries of key ingredients and services, compounded by high absence rates because of the Omicron variant, according to the trading update. These factors affected RGF’s ability to fulfil customer orders.
Trading in Q4 and in the first weeks of the group’s new financial year continued to be impacted by these shortages and absences, while significant input cost increases also dragged profitability down, it said.
The group will focus its efforts on ‘products that are profitable’ and pass ‘unprecedented’ cost increases in sugar, palm oil, energy, packaging and transport through to its customers, but a ‘lag effect’ is expected to impact profitability for a few months, it added.
Overall, revenue in the second half of the year was 7% lower than the previous year, although adjusted EBITDA for H2 was ‘marginally positive’.
Net debt as of 31 March 2022 was £25.3m, a reduction of £23.3m during the year. The group’s sale of Brighter Foods in May 2021 for £35.6m enabled £23.1m to be repaid to loan note holders and £8.5m to be paid into the pension scheme to fully fund it on an ongoing basis. Cash from operations showed a net inflow of £0.3m.
Given the challenging environment in terms of both cost and demand pressures, the RGF board said it is focused on reducing complexity and waste, other cost saving projects and selective new product launches to make the business as competitive as possible.
“The last few months have been very difficult due to a number of issues relating to costs, supply chain and unavoidable staff absences leading to our performance for the financial year just ended being worse than we had hoped,” said Mike Holt, executive chairman of RGF.
“The group is determined to hunker down, control costs and protect revenues, and has the support of its loan holders and major shareholders to navigate this difficult time,” Holt added.
No comments yet