24th Mar 2014 09:04
LONDON (Alliance News) - Finsbury Food Group PLC Monday reported a higher profit in the first half of the year, despite a drop in revenues, as internal cost savings offset higher input costs.
But the bread, bakery goods and cake maker left its dividend unchanged and highlighted a tough trading outlook for the second half.
In a trading statement issued in January, Finsbury Food had said it was expecting to report a higher first-half pretax profit, as it managed to offset higher costs for the likes of butter and chocolate, as well as general cost inflation, by cutting costs and improving its efficiency, but warned that the rising costs will hit its second-half performance.
"In reaction to the current trading environment, the group plans to increase investment in promotional activities to develop volumes and undertake an overhead reduction programme which will be completed in the second half. The full year benefit of the overhead reduction will be seen in the next financial year," the company said on Monday.
For the six months to December 28, 2013, Finsbury Food reported a 1.8% fall in revenue to GBP86.6 million, compared with GBP88.2 million a year earlier, after it sold its Free From business in February last year for GBP21 million, to focus on its core bakery business.
Sales from its UK bakery business fell by 2%, or GBP1.6 million, but revenues from its European joint venture export business were flat. It said its planned capital investment programme within its UK bakery sector is progressing well.
Finsbury Food said strong selling cakes during the period were Spiderman, Moshi Monsters and One Direction celebration cakes, as well as the Me to You cake range, which it recently added to its portfolio.
Pretax profit for the first half rose to GBP2.1 million, up from GBP1.4 million a year earlier.
Finsbury Food more than halved its net debt in the first half of the year, to GBP11.8 million from GBP27.4 million the prior year, largely due to the disposal of its Free From business, which strengthened its balance sheet.
The group maintained its interim dividend at 0.25 pence per share. Chief Executive John Duffy said the trading environment remains tough in the short term, but he is confident an improvement in consumer behaviour lies ahead.
"Whilst the trading environment remains tough in the short term, our low level of debt and interest costs allow us to make significant investment in our factories and businesses for the future, in line with our stated strategy," said Duffy in a statement.
Shares in Finsbury Food were trading 0.5% or 0.25 pence higher Monday morning at 54.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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