With retailers still firmly in disinflationary mode, the cake and bread world is tough. But bosses at Finsbury Food (FIF) claim it's well-positioned to deal with such conditions. The value of the bread and 'morning goods' retail market is down 1.5 per cent, but it was bread products that dragged down interim numbers according to Finsbury chief John Duffy. 'Morning goods' - products typically consumed for breakfast - grew by 3.2 per cent, however, which is "largely where [the group] plays".
Acquisitions boosted reported figures, although organic growth also remained robust. The purchases of Fletchers Group in 2014 and Johnstone's Just Desserts last year means Finsbury now has access to the food service market, which includes coffee shops, restaurants and casual dining outlets. Mr Duffy said this £500m market was growing at roughly 9 per cent per year at present, reflecting the growing trend towards eating out.
Encouragingly, a £2.1m investment Finsbury made at its Hamilton site has made the group more efficient, in turn lifting operating margins to 5 per cent. Mr Duffy said his aim was to maintain margins between 5 per cent and 5.5 per cent, a level he deems "sustainable".
House broker Cenkos has upgraded its forecasts and now expects pre-tax profits of £15.8m on a pro-forma basis (2016 is a 53-week period) leading to EPS of 9.5p, up from £11.8m and 8.3p in 2015.
| FINSBURY FOOD (FIF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 112p | MARKET VALUE: | £143m | |
| TOUCH: | 111p-113p | 12-MONTH HIGH: | 119p | LOW: 66p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 81p* | NET DEBT: | 20% | |
| Half-year to 26 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 108 | 4.06 | 2.1 | 0.83 |
| 2015 | 157 | 7.48 | 4.4 | 0.93 |
| % change | +46 | +84 | +110 | +12 |
Ex-div: 31 Mar Payment: 22 Apr *Includes intangible assets of £79.8m, or 63p a share | ||||
