Real Good Food strengthens its position in bakery

By Peter Stiff

- Last updated on GMT

Related tags Food Good food company

Real Good Food Company (RGFC) has turned around its margins from a
small loss to a modest five per cent, as a result of its
acquisition strategy in the food sector.

The firm's sales of £117.6m for 2005 were bolstered by the acquisition of Napier Brown Foods, which was also principally responsible for an upturn in operating profit to £5.9m.

RGFC will now look to increase the profitability of its operations and generate organic growth, which was marginal over last year.

"Strong progress on a number of fronts has been achieved in building a robust platform for future growth,"​ chairman, Pieter Totte said. "We will concentrate on developing our assets to their maximum potential and to exploit all commercial opportunities whilst continuing to identify small bolt-on targets to supplement and develop the activities of our operating companies."

Strategies of consolidation in the food industry have emerged as a successful and efficient method of generating wealth. In the bakery, confectionery and snacks markets similar buy-out companies such as Glisten and Zetar have posted increased profits as a result of brand crossover and group cost cutting.

"We have achieved an important scale in each of our divisions and we are beginning to yield the benefits of cross divisional initiatives in terms of cost reduction, purchasing economies and sales opportunities,"​ Totte said.

Sales for the company's bakery division increased by nearly 10 per cent in 2005, primarily due to Hayden's Bakeries' improved profitability.

The company said it had made a promising start to the new year, with increased sales to its largest customer Waitrose and deliveries to new retail customers expected to start in April.

Management said that sales in the bakery ingredients division were below expectations but still ahead of the previous year. The company added it was addressing issues of inefficiency and that operational processes are being refined.

The company's sugar division chiefly consists of the recently acquired Napier Brown Foods business, which represented a move to secure its supplier base for its bakery operations.

Management believes the sugar division is well positioned to take advantage of impending EU sugar reform and in the meantime has won a contract to supply supermarket group Wm Morrison.

Sales in RGFC's fish division increased eight per cent on 2004's figures.RGFC started in February 2003 as a food buyout group with a view to acquire companies or businesses that were considered to be non-core operations by other food groups and private companies that needed investment in management or infrastructure.

Since being founded RGFC has acquired several operations and has attempted to integrate new business to enhance profitability and cut costs.

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