Finsbury a victim of its own success

- Last updated on GMT

Related tags: Wales, Cost, United kingdom

Food Group, the UK speciality cakes manufacturer, had such a
successful Christmas trading period that it found itself unable to
meet demand for its products and suffered a reduction in profits as
a result.

The company said that its Memory Lane Cakes unit, based in the Welsh capital Cardiff, had gone from strength to strength over the last few months, with underlying sales in the first half of the year some 20 per cent higher than in 2002/03.

But the highest Christmas sales level to date (year-on-year sales of Christmas lines doubled) meant that the company was unable to find sufficient numbers of short-term employees to meet demand, leading to "significant inefficiencies in the manufacturing processes"​.

This, together with rising raw material costs this, means that the company is now unlikely to meet its original profit growth forecasts for the year, the company said in a statement.

It added that it already had a number of initiatives underway to reduce its exposure to these problems, including substantial new capital expenditure and a thorough overhaul of all operating processes at the Cardiff factory. As for the raw material cost increase, the company said it was negotiating with all its major customers over price rises.

Meanwhile, Finsbury Food has said that the first products from its exclusive, five-year partnership agreement with Nestlé UK will be launched at the end of this month. These Nestlé branded products will be sold to existing Finsbury Food customers as well as through new distribution channels of convenience and impulse outlets, the company said.

Related topics: Markets

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