UK baker buoyed by premium ranges

Cake and bread maker Finsbury Foods today banked a sharp rise in profits after strong consumer demand for its premium range products.

The company posted a 12% rise in pre-tax profits for the six months to December 31 to £1.13m (€1.66m) , with turnover up 32% to £43.4m (€63.9m), led by growth at its Memory Lane Cakes division.

Performance at the Cardiff-based arm was strengthened after it relaunched Tesco’s Finest and Sainsbury’s Taste the Difference cake ranges in September, and the company said it now expects to lead the relaunch of ranges with four other major retailers.

Finsbury currently makes 80-90% of the premium cake ranges at Tesco and Sainsbury, including Sainsbury’s Taste the Difference marbled chocolate topped cake and Tesco Finest’s carrot and orange cake.

The group added that its focus on premium range goods had helped it offset the impact of the growing UK trend towards healthy eating.

It said there was evidence that shoppers are still keen to indulge from time to time and when they do, they increasingly look towards premium range treats, which presented it with good growth opportunities.

Like-for-like sales since the period end have also continued to grow across all of the group’s businesses.

Finsbury said that the success of its premium cake range had led to increased interest in its premium breads and baked goods ranges at its Nicholas & Harris business, which saw sales up 18%.

The Salisbury-based division, which supplies goods to Waitrose, also stands to benefit from growth of its organic products with new ranges set for launch during the remainder of the year, the company said.

Margins remained stable at 39%, despite higher energy costs, although the company said that it was due to raise some selling prices in the second half of the year.

In a move to boost its cake business, the company acquired Lightbody Group in February for £37.5m (€55.2m). The firm makes celebration cakes and holds a 40% share of the UK market.

John Dickinson, analyst at Brewin Dolphin Securities said: “Interim results clearly demonstrated that Finsbury Food is capable of strong organic sales growth and recent new orders should help underpin sales growth into the second half of the year.”

Shares were up 3%, or 3p to 104.5p.