UK: Cake recovery boosts Finsbury earnings
- Rebound in cake sales helps Finsbury revenue
- Pre-tax profits rise 3%
- Finsbury still looking to recoup costs from January dioxin scare
Finsbury Food Group's earnings were boosted by its cake division
Improved sales from Finsbury Food Group's cake division boosted the UK firm's profits in the first six months of its financial year, the company said today (23 March).
Chief executive John Duffy said the company had seen a return to growth from Finsbury's cake business, which supplies own-label lines to UK multiples during the period to 1 January.
Cake sales were up 3% to GBP64.2m, leading to a 6% rise in revenue to GBP87.8m. Pre-tax profits increased 3% to GBP1.9m.
Finsbury's net profit rose from GBP850,000 a year earlier to GBP1.2m, as the company lapped a year when earnings were affected by reorganisation costs and the change in the fair value of interest-rate swaps.
Duffy said: "We have seen strong growth in bread and free-from [products] and perhaps more encouragingly, the return to growth of our cake division. Although we are adopting a cautious approach with the trading environment as it is, we look forward to exploiting the growth opportunities available to us in both the bread and free-from market and also the cake market in the coming year."
Finsbury added that trading since 1 January had been in line with its expectations. Cake sales were up 6%, while like-for-like sales from its bread and free-from division had climbed 5%.
The company said, as with previous years, it expects profits to be higher in the second half of its financial year due to Easter.
Finsbury did reveal, however, that it is still working with its retail customers and its egg supplier to recover costs from the dioxin scare in January, which led to some of the company's products being pulled from shelves.
Finsbury's Memory Lane business received a batch of liquid egg from Germany that had been potentially affected by the dioxin contamination that hit thousands of farms in the country.
The company said at the time that there had been no confirmation that the batch of egg was contaminated but retailers did pull some of its products from shelves.
Finsbury said today: "The early January German fresh egg dioxin scare in our Memory Lane cake business resulted in a challenging start to the second half of the financial year. Although the products were safe to consume, retailers removed cakes from shelves as a precautionary measure.
"The fact that there was no public health risk, has led our insurer to deny recovery of any associated withdrawal costs. We continue to work with retailers and the egg supplier to resolve the issue and address the recovery of costs required."
Shares in Finsbury had risen 6.33% to 21p at 09:41 GMT today.
Click here for the full statement from Finsbury.
Companies: Finsbury Food Group
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