Real Good Food sales grow despite volatile market

07-Dec-2016 - Last updated on 07-Dec-2016 at 09:24 GMT

Real Good Food posts sales growth despite a volatile market

Real Good Food’s sales grew by 5% to £49M in the six months to September 30 2016, driven by the performance of its premium bakery division, the company revealed in its interim report.

The company also posted an increase in gross profit to £13M from £12.5M. This was impacted by the poor performance of its food ingredients division and adverse currency movements.

Earnings before tax were down £0.8M from the previous year to £1.2M. Real Good Food attributed the fall to increased investment in the group, mainly in its new development centre and expansion into the US.

However, the company said the investments would drive future growth and operating efficiencies.

Continued to be difficult

Executive chairman Pieter Totté said trading performance for the company had been in line with the board’s expectations. One exception was its subsidiary Garrett Ingredients, where the dairy and sugar markets have continued to be difficult – not helped by recent currency fluctuations.

“Our new Development Centre at Liverpool is beginning to pay dividends following a number of high profile customer visits and the opening of our own sales and warehousing operation in the US will enable significant sales growth from early 2017.

“At the same time, we are finalising other investment plans at our sites in Liverpool and Devizes to improve our operational efficiency over the medium term.”

The price of raw materials had been a problem for Real Good Food, directly impacting the company’s food ingredients business.

Make most of its profit

The company was looking forward to the second half of the year, which it said was where it would make most of its profit. That was likely to be driven by cake decoration and premium bakery sales in the run-up to Christmas.

“Sales trends for the key third quarter are in line with expectations to date and we anticipate significant year-on-year growth in EBITDA [earnings before interest, taxes, depreciation and amortisation] in the second half,” added Totté.

But volatile commodity prices could affect performance, he added.

“The uncertainty in commodity pricing – in particular at Garrett Ingredients, means that, while we expect our year end-EBITDA to be ahead of last year, there is a risk that it could fall short of current market estimates.”