UK cake maker Finsbury Food Group today (23 January) revealed a 16% jump in half-year sales but said input costs was continuing to put pressure on margins.
Finsbury, which manufactures cake, morning goods and gluten-free bread, said its sales reached GBP102m in the six months to the end of December.
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The company said growth across the business had led it to generate over GBP100m in sales over the first six months of its financial year for the first time. Sales from Lightbody Europe, the export venture in which Finsbury owns 50%, more than doubled.
However, Finsbury said trading remained “tough” with shoppers “financially squeezed” and input prices “stubbornly high”.
Improved volumes, an increase in prices and programmes to make the company more efficient were not enough to stop margins falling.
Chief executive John Duffy said: “Commodity inflation remains very high year-on-year and this continues to depress our already low operating margins. It is hard to forecast any improvement in this in the short term. However, management and staff are committed to deliver on our twin strategy of growth and continued efficiency investment to ensure our continued success in this difficult market place.”
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By GlobalDataLooking ahead, Finsbury said its sales were unlikely to grow at the same rate in the second half of its financial year. The company pointed to increased promotional activity and said it was also lapping last year’s product launches and the signing of new contracts in Europe.
Panmure Gordon analyst Graham Jones said Finsbury’s first-half operating margins were likely to fall by around 30 basis points to 3.3%. However, lower interest charges meant Jones still sees Finsbury’s pre-tax profits growing 16%. He maintained his ‘buy’ rating on the shares, which were up 3.45% at 30p at 17:15 GMT.
