Real Good Food considers selling Napier Brown
In a statement issued this morning (April 1), the firm said: “The company is in discussions with several parties in relation to a potential transaction involving Napier Brown.
“Such a transaction, if successfully concluded, would enable the company to significantly strengthen its balance sheet and focus on more stable earnings growth going forward. A further update will be provided in due course.”
It is unclear at this stage whether any potential deal would take the form of a straight sale and acquisition process.
Plunging sugar prices
Plunging EU sugar prices were continuing to make trading difficult for Napier Brown and Garrett Ingredients, said Real Good Food.
“Following a very poor first half, Napier Brown has returned to profit but, notwithstanding the improved trading in the second half, has unfortunately remained behind expectations for the year.
“The rest of the group has performed strongly and ahead of management expectations, with Renshaw and Haydens in particular performing well.”
Its costly, long-running legal battle with British Sugar over what Real Good Food alleged were anti-competitive practices, which the Competition and Markets Authority shelved last September, had also hit Napier Brown, it said.
Accounting for these factors, Real Good Food expected reported earnings, before adjustments for one-off costs or restructuring, to be significantly behind current market expectations for the year ending March 31 2015.
‘Low point’
‘’The difficulties in the sugar market have been covered extensively elsewhere but there are signs that prices have reached their low point and will recover over the next two years,” said Pieter Totté, Real Good Food executive chairman. “As stated, we are examining options for our sugar business.
“Elsewhere I am delighted with performance in two areas in particular. In cake decoration, Renshaw has performed very strongly and our recent acquisition of Rainbow Dust Colours is already giving us sales opportunities both in the UK and across Europe.
“… Premium bakery Haydens has continued to trade well, successfully expanding its customer base. We plan to give additional focus to these attractive sectors over the coming year.”
