Real Good Food (RGF), the food ingredients and bakery supplier, has warned profits for the year ended 31 March will not hit market expectations.
According to a special trading update from RGF, continuing business ebitda was now expected to remain flat for the year, which the company blamed on the cost of investing in major restructuring and strategy programmes.
The board said it was confident that the negative impact on margins was short-term and that RGF was well positioned for future growth following its investment programme.
RGF said: “The business has invested heavily in people, product and brand across all its businesses as it executes its strategy of achieving the optimal operating platform from which to drive significant future growth.”
It added that the sale of troublesome sugar arm Napier Brown had delivered an exceptional profit of £9.4m.
This is expected to “substantially reduce” the group’s net borrowings and encouraged the company to expect profit before tax and earnings per share to be “significantly improved” on the previous year.
It said: “This leaves the group in a strong position to execute its dual investment and acquisition strategy, which is already well under way, leading to future growth and increased financial strength.”