There were three main ingredients in speciality baker Finsbury Food's (FIF) strong interim results, according to chief executive John Duffy. For starters, a programme of cost-cutting, together with capital expenditure to improve production-line efficiency, contributed to a 74 per cent uplift in operating profit to £4.5m - or 57 per cent on a like-for-like basis.
The icing on the cake was the 5.6 per cent increase in organic sales, which was underpinned by good trading in the celebration range. Central to that was the success of the Frozen Disney cake, demonstrating Finsbury's ability to develop products and benefit from shared rights and commercial tie-ins. Predicting the next hit is still tricky, and Mr Duffy admits trends can lead to "spiky" trading. But revenues across the cake brands - which also include Marvel Comics, Thorntons and Weight Watchers - are growing at a steadier rate.
Overall revenue growth was largely driven by the inclusion of two months' sales from Fletchers Bakery Group, which Finsbury acquired in October 2014 for £56m. The deal means Finsbury has annualised revenues of around £270m, and by default gives it greater exposure to the supermarket price war. Mr Duffy is not unduly concerned, however, pointing to the resilience of the sector and Finsbury's moves to follow customers to discount retailers.
Broker Cenkos forecasts full-year adjusted pre-tax profits of £10.3m and earnings per share of 7.9p (from £6.6m and 7p in 2014).
| FINSBURY FOOD GROUP (FIF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 74p | MARKET VALUE: | £93m | |
| TOUCH: | 72-75p | 12-MONTH HIGH: | 74p | LOW: 54p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 77p* | NET DEBT: | 25% | |
| Half-year to 28 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 87 | 2.1 | 2.2 | 0.25 |
| 2014 | 108 | 4.1 | 2.1 | 0.83 |
| % change | +24 | +93 | -5 | +232 |
Ex-div: tba Payment :tba *Includes intangibles of £79m, or 62p a share. | ||||
