Given higher raw-material costs and the well-documented rise of the discount retailers, Finsbury Food (FIF) made admirable progress last year. The discounters are putting pressure on some of Finsbury's biggest supermarket customers, even as consumers buy fewer baked goods.
The cake and bread maker cut £1m of annual overhead costs in response, but it also continued to invest in the business. Capital spending increased by 50 per cent to £6.2m, as Finsbury increased capacity at its specialist bread bakery and invested in high-tech robotics at its cake factory. These efforts, combined with a lower interest charge on debt following the sale of the Free From business in February 2013, drove an 18 per cent increase in adjusted pre-tax profit to £6.5m, despite flat sales.
The aptly named new chairman, Peter Baker, said growth would now primarily come through acquisitions. Chief executive John Duffy stressed that investment had left Finsbury well placed to expand in a fragmented market, and that there would be further capital spending this year. He also confirmed that Finsbury was supplying some of the discounters, such as Aldi and Lidl.
Broker Cenkos expects adjusted pre-tax profit of £7.6m for the full year, giving EPS of 8p.
| FINSBURY FOOD (FIF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 63p | MARKET VALUE: | £ 42m | |
| TOUCH: | 62-63p | 12-MONTH HIGH: | 78p | LOW: 48p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 94p* | NET DEBT: | 14% | |
| Year to 28 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 168 | 4.9 | 5.7 | nil |
| 2011 | 190 | 6.0 | 7.6 | nil |
| 2012 | 179 | 4.6 | 8.0 | nil |
| 2013 | 177 | 6.1 | 12.3 | 0.75 |
| 2014 | 176 | 6.6 | 6.7 | 1 |
| % change | -1 | +8 | -46 | +33 |
Ex-div: 13 Nov Payment: 10 Dec *Includes intangible assets of £53m or 79p a share | ||||
