The Real Good Food Com-pany blamed delays in implementation of the new EU sugar regime for a “very disappointing” performance of its Napier Brown Foods sugar division in a trading update last week.

It warned at its AGM that pressure on margins at Napier Brown will lead to “a significant reduction in group profitability”, although its other businesses were on track to achieve results in line with expectations.

Napier Brown’s sugar margins have been hit, and were particularly thin in the bulk industrial sector for a number of reasons, particularly competitive price pressures, said RGF. But Napier has maintained share in premium sectors and, following investment, expects to see volume growth from added-value products.

Development director Peter Hough told British Baker reforms of the EU sugar regime, which will be phased in from July, have caused uncertainty in the market as no-one is sure which sugar producers will reduce or exit production.

Napier Brown has already started a cost reduction programme to remain cost competitive, Hough said. For example, it will close its London office in the summer and operate from its Normanton plant. Napier will continue to supply manufacturing, foodservice and retail markets, he added.

Elsewhere in RGF, trading remains in line with expectations. In bakery, comprising Hayden’s Bakeries and Seriously Scrumptious, sales are up 4%. At Renshaw, the ingredients division, progress has been made in restructuring the Liverpool plant.