Renshaw and Brighter Foods owner Real Good Food (RGF) has reduced its losses despite a ‘difficult period’ for its cake decorations business.
RGF has reported revenue from its continuing operations up 7% to £32.4m in the six months ended 30 September 2019. Loss before tax has fallen from £9.1m to £2.5m, while revenue growth and cost savings drove a £1.9m increase in underlying adjusted EBITDA to £2.8m.
RGF has shed many of its businesses in the past two years, and now comprises a Cake Decoration division made up of Renshaw and Rainbow Dust Colours, and Food Ingredients division comprising snack bar manufacturer Brighter Foods.
Cake Decoration performance
Cake Decoration revenue was £19.9m, down 10% from the year before. RGF said challenges in the retail sector had put pressure on sales of icing and marzipan.
Underlying adjusted EBITDA fell £0.7m to £0.6m, which had been driven by pressure on margins and delay in commissioning new soft icing equipment, which is due for completion next January. RGF said sales of soft icings is a double-digit growth opportunity that Renshaw is “well placed to benefit from”.
Steve Moon joined as chief executive of Cake Decoration in August, while Renshaw North America has signed an exclusive distribution agreement with Decopac, described by RGF as the largest supplier of cake decorations to professional cake decorators and bakeries in the US.
Full-year sales are anticipated to be in line with management expectations, with ongoing cost savings expected to deliver benefits in the full year.
Food Ingredients performance
RGF’s Food Ingredients division reported an 81% increase in revenue to £12.5m. Underlying adjusted EBITDA rose from £1.4m last year to £2.5m in line with management’s expectations.
RGF said the performance reflected significant growth, with new and existing customers using additional capacity made available following the acquisition of a factory in Tywyn, Gwynedd.
"The group has made significant progress over the past six months, especially within Food Ingredients where capacity has doubled and is almost fully utilised with strong order intake and commitments from both new and existing customers,” said RGF non-executive chairman Mike Holt.
“While cake decoration has had a difficult period, its new chief executive has launched a major improvement programme focussed on developing strategic partnerships with customers and distributors and driving fundamental operational improvements, the benefits of which are beginning to come through.”
Holt explained that RGF now had two core businesses with clear growth strategies, and the “leadership and resources to deliver upon them”.
“With a lower cost base in place and the group’s improving performance increasingly evident, the board is confident of delivering further progress in the second half and beyond,” he added.