The decision to close pastry factory Grain D’Or last November means these half-year figures from Finsbury Food (FIF) require a degree of decoding. For example, reported group revenue rose by a paltry 0.7 per cent, but once you adjust for the closure, underlying revenues actually improved by 2.5 per cent. Adjusted operating profit also moved higher – by 4.7 per cent to £8.7m – but this didn’t include £3.3m-worth of losses incurred by Grain D’Or. The decision to close followed a difficult year for butter prices, which have climbed from roughly £2,000 per tonne two years ago, to a peak of £6,000. That has forced the company to minimise its exposure to the commodity, and even think about reformulating remaining products to limit the ingredient.
Grain D’Or aside, a recent wave of capital expenditure is paying off via margin improvement. Investments in automation and other operational efficiencies allowed operating margins to expand from 5.3 per cent to 5.5 per cent in the first half, while solid cash generation allowed for a £4.4m reduction in net debt.
Analysts at Panmure Gordon expect pre-tax profit of £17.7m for the year ending June 2018, giving EPS of 9.7p, compared with £17.1m and 9.5p in FY2017.
| FINSBURY FOOD (FIF) | ||||
| ORD PRICE: | 116p | MARKET VALUE: | £151m | |
| TOUCH: | 115-117p | 12-MONTH HIGH: | 119p | LOW: 99p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | na | |
| NET ASSET VALUE: | 76p* | NET DEBT: | 16% | |
| Half-year to 30 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 157 | 7.9 | 4.8 | 1.00 |
| 2017 | 158 | 8.4 | -1.4 | 1.10 |
| % change | +1 | +6 | - | +10 |
| Ex-div: | 02 Apr | |||
| Payment: | 27 Apr | |||
| *Includes intangible assets of £82m, or 63p a share | ||||
