British sugar dispute still impacts RGFC sales

Bakery ingredients supplier The Real Good Food Company (RGFC) reveals sales are still being impacted by ‘anti-competitive’ behaviour by British Sugar, part of Associated British Foods (ABF).

Napier Brown’s parent company, RGFC, said that the ongoing dispute was overshadowing its final results, released today.

The company saw revenue rise from £265.7M to £272.5M for the period ending March 31, however pre-tax profit tumbled from £10.4M to £3.3M.

Pieter Totté, RGFC’s chairman, said this shadowed other significant retail and wholesale contracts, which were driving Whitworths brand growth. The results also pointed out Renshaw and Haydens sales were up 4.7% and 7.6% respectively.

'Hopeful' 

Totté said: "It would be easy to focus on the impact on our results caused by what we believe to be anti-competitive behaviour by British Sugar, but we have previously disclosed the background to this matter in our 21stFebruary Trading Statement.

"The reduction in Group EBITDA to £3.3 million hides significant progress in a number of operating divisions. In particular, the Renshaw result was very encouraging, while at Haydens it is clear that the new business model is beginning to deliver.

"We remain in close dialogue with the Competition and Markets Authority ("CMA") and are hopeful that the regulator will take the necessary steps to ensure that competition law is enforced. However, as we indicated in our recent updates, the current sugar contract year does not end until 30th September, coinciding with our half year so despite continued strong trading at Renshaw and Haydens, our first half performance will still be materially affected. Beyond that, negotiations for the new sugar contract year are progressing and we are working on a number of strategic sourcing initiatives on the back of our investment in the Stallingborough Sugar Hub which will bring long term benefits."

In its third quarter trading update in February, the company said that Associated British Foods (ABF) could face a significant fine if its British Sugar subsidiary is "once again found guilty of abusing its dominant position in the supply of sugar to Napier Brown".

Challenges

It warned that instability in the sugar market was giving it short term challenges, with the lowering of prices in the sugar market affecting profitability at Napier Brown.

As the company looks forward, it says it will act on the conclusion of the CMA in regards to its complaint, but is working on a necessary contingency plan. It says it is developing managing structures and transforming operating companies into stand-alone businesses. 

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