Finsbury Foods sees sales rise but cost inflation dents profit
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Finsbury Foods profit slumped on cost inflation, but price hikes push Mary Berry Baker to double-digit sales growth
- First half turnover up 15% to £191m, but operating profit flat at £6.5m
- Sales of bakery products in the UK to grocers and caterers increased by 13%, abroad by 23%
The bakery specialty behind Finsbury Food, Mary Berry’s cake range, posted double-digit sales growth, but warned of challenges as profits were hampered by cost inflation.
Finsbury praised an ‘encouraging’ performance in the first half, with sales up 15 per cent to £191 million, thanks to higher prices.
However, operating profit was flat at £6.5m, which the AIM-listed group said was mainly attributed to higher input costs hurting margins.
Finsbury Food, which makes Mary Berry’s cake range, said high costs dented profits
Finsbury, which makes pies, breads, sandwiches and morning pastries, supplies all major supermarkets, as well as wholesale caterers and restaurant chains. The company is known for the quality of its products.
UK bakery sales to grocers and caterers rose 13.2 per cent to £161 million, while operating profit rose slightly from £4.7 million a year earlier to £4.8 million.
But the group signaled lower operating margins, which it said reflected the “challenge of inflation recovery” as raw material costs rose.
The group’s UK foodservice division, which supplies caterers and restaurants across the country, saw sales rise 22 percent in the last six months of 2022.
This part of the business was hit hard during the pandemic but has seen a strong upturn in demand since the easing of Covid restrictions.
Meanwhile, the British retail branch, which supplies supermarkets and other retailers, saw turnover increase by 10.9 percent.
Overseas sales, including France, Poland, Scandinavia and the US, rose 23.4 per cent to £30 million, but margins were again under pressure from higher input costs and a change in product mix.
Finsbury said it saw steady demand for its products but warned that macroeconomic challenges – namely high inflation and low consumer confidence – remain.
Finsbury Group Shares fell 3 percent to 96 pence, though the stock is up about 13 percent over the past year.
Chief executive, John Duffy, said: ‘We have seen stable performance in the UK retail sector, a continued recovery in the UK food service and continued growth in our Overseas division, despite the challenges of continued significant input cost inflation and declining consumer confidence. ‘
And added: “Looking forward, we expect to continue to navigate a challenging macroeconomic environment as inflationary pressures appear to persist and short-term prospects remain difficult to predict.
“However, Finsbury is now an agile and adaptable group and I am confident we remain well placed to successfully execute our strategy.”