Shares in UK-based The Real Good Food Co. have fallen today (1 August) as the company saw first-half net debt increase on the back of rising commodity costs.

The company’s share price was down 6.7% today at 12:25 BST to 67.5p a share.

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Shore Capital analyst Phil Carroll attributed the decline to an increase in working capital and net debt, which increased 19% to GBP39.3m (US$64.5m) and 12.7% GBP31.9m, respectively.

Real Good Food said debt rose on the back of commodity cost increases and increased stock levels at Renshaw and Napier Brown to support its growth plans.

For the half ended 24 June, EBITDA rose to GBP2.7m from GBP600,000, while sales was up  21% to GBP110m.

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Carroll described the results as “solid” and said he anticipates there will be “some reversal” in debt during the second half as stock levels resuce”.

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Real Good Food Co. said a new marketing team working in the Napier Brown division has begun evaluating the potential for further developing the Whitworths brand within sugar. It plans to launch a range of products targeting the home baking market in the autumn, with further initiatives planned in 2012.

The launch of Renshaw-branded products is well under way, the manufacturer said, with Snip and Swirl icing now available in selected retailers, sugar-craft outlets and wholesalers. The full range will be launched at the end of this month, with a progressive roll-out to all major outlets before the end of the year. It plans to launch ad campaigns in both the trade and consumer press shortly.

Executive chairman Pieter Totté said: “During the second half of 2011 our management teams will remain focussed on the key challenges of extending the Renshaw brand in retail, expanding the Whitworth speciality sugar range, widening product offering at Garrett’s and improving operational performance at Haydens. Based on the progress we have made over the past six months, I am confident that the group is on course to meet market expectations for the year.”