Multi-channel strategy reaps significant rewards for Finsbury

Cake, bread and morning goods manufacturer Finsbury Food Group has enjoyed a near 25% rise in group revenue for the financial year ended 2 July 2016, according to preliminary results from the company.

Group revenue rose 24.8% to £319.7m, with 52-week revenue up 22.4% to £313/5m (2015: £256.2m).

Adjusted operating profit was up 37.7% to £17.1m on the prior year for the 52-week period, with adjusted profit before tax of £16m, up 40.8% (2015: £11.4m). These excluded significant non-recurring and other items and included amortisation of intangibles.

Meanwhile adjusted diluted EPS was up 19% to 9.5p per share (2015: 8p per share).

The UK bakery division saw like-for-like growth of 3%, but the company’s star performance was in its overseas division, the group’s 50%-owned European business, up 25%, which was due to improved distribution of licensed celebration cake and free-from bakery ranges. In a statement, the company said growth in UK bakery was well-diversified across different products, customer and channels given the new mix brought its recently acquired and integrated Fletchers Group and Johnstones Food Services businesses.

Finsbury Food Group chief executive John Duffy said: “If 2015 was all about transformation for the group, then 2016 has been about delivering on our growth strategy and moving even closer to our vision of building the leading speciality bakery group in the UK, focused on quality products.”

The foodservice channel accounted for 21.2% of total UK bakery sales, with six out of eight sites now supplying into this channel, including the launch of a new range of cakes. Revenue in the channel was up 5.3% on a like-for-like basis.

Duffy added: “There has been significant top and bottom line growth, as a result of considerable efforts across the whole company. The integration of Fletchers and Johnstones has been one of our priorities and we continue to invest across all aspects of the business, diversifying into new channels and widening our customer base to deliver a stronger platform for future growth and ensure our long-term competitiveness.”

In the past year, the company has invested £12m in capital expenditure, allowing it to create a new artisan bread bakery, increase its hot cross bun capacity and further automate cake production. The company is also rolling out the Fletchers Group IT software platform across the company, following a comprehensive best-practice review.

Finsbury has also had awards success, scooping the Celebration Cake Business of the Year at this year's Baking Industry Awards on 7 September, organised by British Baker.

Referring to the different market sectors in the UK, the company said the total ambient cake market (including pre-packed cake and in-store bakery) was valued at £1.09bn (Kantar Worldpanel 52 w/e 19 June 2016), with the past 12 months seeing market value and unit sales falling by 0.4% and 1.5% respectively. It claimed that its core markets of celebration cake, whole cake and cake bites continued to perform well during this period.

However, greater focus has been trained on growing sectors of bread and morning goods. Although annual retail brad an morning goods sales, which are in excess of £4bn (Kantar 52 w/e 19 June 2016), are in decline driven by the fall in sales of packaged sliced bread, the foodservice bread and morning goods market continues to grow and has sales in excess of £800m per annum. Meanwhile, the UK foodservice cake and sweet treats market is worth around £600m per annum (source: NPD/group management 52 w/e 30 June 2016), said the company. Growth, it added, was coming from a number of categories with the star being added value burger buns, such as brioche buns.

Duffy summed up: “The enlarged multi-channel business is in good shape for the growth opportunities and challenges ahead, with strongly performing businesses and a strong balance sheet.”

In July Finsbury extended its celebration cake licences with two new additions.

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