Real Good Food braves bitter-sweet year
Full-year results until December 31 2010 reflected an upturn in RGFC’s fortunes after it posted a pre-tax loss of £1.3m in the the first half (H1) of 2010.
Although the firm said full-year sales fell 7% to £200.1m (2009: £215m), “solely due to the reduced EU intervention price for sugar”, pre-tax profits were up to £2.34m, compared with £2.15m in 2009, while net debt fell £1.5m to £22.6m.
Toughest ever sugar year
Totté (pictured) said that 2010 was the “toughest ever” financial year in margin terms for its sugar business Napier Brown, due to the last stage of the EU sugar regime reform, which led the EU to become a net sugar importer during 2010.
World sugar prices doubled from July to September 2010, Totté said, leading to shortages as world producers sold to local markets, given that EU reference prices (which form the basis of negotiations with importers) fell 28% on 2008 levels.
But from October 1 2010 Napier Brown saw improved volumes/margins that have continued into 2011, Totté said, with Q4 prices increasing “at a much higher level and faster than expected”, with greater 2011 progress expected in bagged sugar.
Tight EU and world supplies worsened by crop problems are set to continue into 2011/12, Totté said, where Napier Brown plans to increase multiple sourcing, especially from abroad given cuts in UK cane refining and beet crop issues.
UK sugar suppliers lose out
“Two years ago the overwhelming majority of our purchases came from the UK. This has already begun to change … and we would envisage over 50% of our supply being imported by 2012,” said Totté, who also cited substantial price rises from RGFC’s two main UK sugar suppliers in early 2011, which it had passed on to customers.
2010 infrastructure investment at Napier saw a new 25kg bagging line installed at its processing and packing site in Normanton, Yorkshire; future plans include upgrading sugar processing equipment and new pack formats, while the marketing spend will be upped for the Whitworths brand.
Sweet bakery division Haydens will spend £800,000 on a 30,000 sq ft distribution site next to its existing site in Devizes, Wiltshire this Easter, increasing its area by 40% and freeing space for two new process lines as a phased refurbishment project starts.
Haydens’ main customer is Waitrose, and sales rose 10% with strong growth in desserts (20%+), where RGFC said the division saw its strongest ever Christmas despite poor weather.
Garrett Ingredients diversifies
Other non-sugar divisions also performed well, with £25.58m turnover dairy ingredient and sugar supplier Garrett Ingredients – now demerged from Napier Brown – recording 2010 earnings before interest, tax and amortisation (EBITDA) of £1.2m (10% up on 2009).
During 2010 the firm diversified further into bakery, ready meals and soft drink ingredients (where its traditional focus is ice cream) and actively expanded its UK, Ireland and European supply base.
Strong year-on-year growth also saw bakery ingredients division Renshaw (2010 turnover £43m) boost EBITA by 67% to £5.5m – with sugar icing especially successful – while a Renshaw branded range is due to launch in May.
