Finsbury, which produces bread and cakes, including a wide range of licensed products, reported a 21% surge in like-for-like operating profit to £8m ($11.3m) on a 7.4% increase in like-for-like revenue to £156.6m ($221m).
The company said that, while the UK grocery market continued to be challenging, the wider economic environment was “slowly improving.” It added that acquisitions had given it access to a broader range of channels, customers and products, and were expanding the business in higher growth opportunities such as foodservice.
The acquisitions of Fletchers Bakeries in October 2014 and Johnstone’s Bakers in June 2015 had been fully integrated, said Finsbury. Fletchers had given the Group new foodservice channels and complementary product ranges, while Johnstone’s had a customer base in the coffee shop sector, which the Group previously had little exposure to.
UK Bakery division
The company’s UK Bakery division - comprising cake, bread and morning goods in the grocery and food service channels - grew 49% to £143.2m ($201.9m), and rose 6.1% on a like-for-like basis.
Revenue growth had been driven by the success of the manufacturer’s Minions licensed celebration cake, promotional activity on cake bites, and good Christmas trading.
The acquisition of Fletchers had expanded the Group’s bread and morning goods offer, said Finsbury, adding that while the overall UK bread market was challenging, the Group’s focus on “niche style products” had helped it perform ahead of the market.
Foodservice sales were experiencing strong organic growth, reported the business, driven by new bread and morning goods products, including organic bread and 10-inch round cakes launched under the Kara foodservice brand.
Finsbury’s overseas business, which comprises Lightbody Europe and trades primarily in France, grew 19% to £13.4m ($18.9m).
“We are very pleased to once again be reporting a strong first half performance, with our organic growth being supplemented by the acquisition of Fletchers and Johnstone’s,” said Finsbury chief executive John Duffy. “Alongside this growth, our capital investment strategy, together with our continued efficiency programme has resulted in improved operating margins.”
Looking ahead, the company said growth would continue to come from a combination of organic growth and targeted acquisitions.
Finsbury added it would continue to invest in automation and operational improvements to increase product capabilities and margins in its UK Bakery division. It added that National Living Wage legislation – a compulsory minimum wage that comes into force in the UK next month – presents a challenge that the Group is preparing for through initiatives including greater focus on efficiency improvements and cost reduction programs.
'A challenging market'
“Despite operating in a challenging market, we have created a Group that is well positioned to flourish in an improving environment and we look forward to benefitting from increased consumer confidence,” added Duffy.
“Having built solid foundations and implemented a robust growth strategy that aims to create sustainable value for our stakeholders, we look forward to driving further growth both organically and through strategic M&A.”