Major grocers such as Sainsbury and Tesco account for more than 90 per cent of sales for baker Finsbury Food (FIF). With growth slowing at these supermarket giants as a result of weak consumer spending, Finsbury is also feeling the pain in the form of lower demand for its breads and cakes.
But Finsbury still managed to deliver a huge increase in pre-tax profit thanks to lower debt, which reduced borrowing costs. It also offset soaring prices for key ingredients like butter and chocolate by cutting costs along the supply chain. The artisan breads division traded well, too, while celebration cakes outperformed the market, with particularly strong sales of One Direction and Spiderman varieties.
Cost-cutting will continue into the second half on a "very large scale", according to finance director Stephen Boyd, even as the company continues to invest in facilities to lower production costs. The strategy is to step up promotional activity in the second half to drive volume growth at lower per unit cost, with the full benefits felt in the next financial year.
Broker Cenkos expects adjusted pre-tax profit of £5.8m for the full year, giving EPS of 6.3p, from £5.5m and 6.5p in 2013.
| FINSBURY FOOD (FIF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 54p | MARKET VALUE: | £36m | |
| TOUCH: | 53-55p | 12-MONTH HIGH: | 78p | LOW: 48p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 91p* | NET DEBT: | 19% | |
| Half-year to 28 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 88.2 | 1.4 | 3.6 | 0.25 |
| 2013 | 86.6 | 2.1 | 2.2 | 0.25 |
| % change | -2 | +50 | -39 | - |
Ex-div: TBC Payment: TBC *Includes intangible assets of £53.1m or 80p a share | ||||
