RHM bakery boosted by core brands

By Catherine Boal

- Last updated on GMT

Related tags: Bread

Increased investment in core bakery brands appears to have paid off
for food group RHM which has reported climbing profits despite poor
wheat supplies and high commodity prices denting trading
conditions.

Turnover for the group's bread bakeries division rose 2.6 per cent to £395.8m (€588.2m) while overall operating profit was up 11.2 per cent to £61.8m (€91.8m).

The company said slow recovery from high wheat prices cost £2m (€2.9m) in the first half of the year but said third party flour price increases had worked to offset the loss.

In addition, advertising spend rose to £2m (€2.9m) as investment in core brands such as Hovis and Nimble breads pushed up sales.

Hovis bread benefited from a complete overhaul earlier in the year with new recipe formulation, a change in packaging and a marketing drive entitled 'Hovis is for life'.

RHM intend to build on the renewed Hovis brand with a new advertising campaign beginning next year and operations at a new plant already underway.

But RHM CEO Ian McMahon warned in the trading statement that future sales may still feel the effects of unstable trading conditions.

He said: "Bread Bakeries' performance will depend upon any further movements in the wheat price and the timing of bread price increases."

In the company's cakes division turnover rose 10 per cent to £118m (€175.3), buoyed by sales of the Mr Kipling range which increased by over 16 per cent.

Chairman Jan du Plessis said: "I am particularly pleased to report that the improvement in Cakes trading that was demonstrated towards the end of our last financial year has continued, with the Mr Kipling brand delivering encouraging like for like growth in both sales and market share."

Related topics: Markets

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