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Capex commitments ease for Finsbury Foods

The speciality bakery group has boosted statutory profits, while capex commitments should ease
February 24, 2020

Finsbury Food (FIF), the speciality bakery group, saw adjusted cash profits, net debt and assets rise due to the adoption of the IFRS 16 lease liabilities accounting standard, while statutory profits at the half-year mark were on the rise due to the organic performance of the UK bakery division, new business wins and the first full six-month contribution from its 'Free From' business segment. 

IC TIP: Hold at 102p

Operating profit in UK bakery increased by 4 per cent, although this was partly offset by a 7 per cent decline in its operations abroad: “It was quite a challenging first half in terms of overseas,” said chief executive John Duffy. But, as he points out, the division accounts for a relatively small part of sales at 13 per cent. The overseas business saw its operating margin dip by 0.3 per cent due "largely” to the impact of commissioning a new bakery in Poland. 

The group remains exposed to commodity headwinds – this year led by flour prices, labour costs and utility inflation. But the group is better placed to deal with external challenges, given its recently completed four-year investment programme to drive capacity and production efficiencies, although "cost mitigation strategies" are ongoing.  

Cenkos forecasts adjusted EPS of 9.8p and adjusted pre-tax profits of £17m for the June 2020 year-end, compared to 9p and £15.9m in FY2019.

FINSBURY FOOD GROUP (FIF)   
ORD PRICE:102pMARKET VALUE:£133m
TOUCH:101-103p12-MONTH HIGH:104pLOW: 59p
DIVIDEND YIELD:1.2%PE RATIO:21
NET ASSET VALUE:84.6p*NET DEBT:29%
Half-year to 28 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20181527.494.301.16
20191598.834.901.23
% change+5+18+14+6
Ex-div:2 Apr   
Payment:24 Apr