Sugar row sours Real Good Food results
LIVERPOOL-based food sector supplier Real Good Food Group saw underlying earnings slump as a result of its row with British Sugar, but said this masked some good news in the business.
The group has complained to the Competition and Markets Authority about alleged anti-competitive behaviour by its larger rival, and says it is “hopeful” for a favourable response from the regulator.
In the year to Match 31 while revenues rose from £265.7m to £272.5m EBITDA dived from £10.4m to £3.3m, while a bottom line profit of £6.6m last year became a £992,000 loss.
RGF admitted the results were overshadowed by impact of the sugar supply disputem but said its Napier Brown subsidiary has secured significant retail and wholesale contracts, driving the brand growth of Whitworths sugar.
In the other divisions, icing, caramels and marxipan maker Renshaw delivered sales growth of 4.7% and and EBITDA up 10.4%. Bakery business Haydens grew sales by 7.6% and improved operational performance and increased EBITDA by £600,000.
Chairman Pieter Totté said: “It would be easy to focus on the impact on our results caused by what we believe to be anti-competitive behaviour by British Sugar.
“The reduction in group EBITDA to £3.3m hides significant progress in a number of operating divisions. In particular, the Renshaw result was very encouraging, while at Haydens it is clear that the new business model is beginning to deliver.
“We remain in close dialogue with the Competition and Markets Authority and are hopeful that the regulator will take the necessary steps to ensure that competition law is enforced. However, as we indicated in our recent updates, the current sugar contract year does not end until 30th September, coinciding with our half year so despite continued strong trading at Renshaw and Haydens, our first half performance will still be materially affected.
“Beyond that, negotiations for the new sugar contract year are progressing and we are working on a number of strategic sourcing initiatives on the back of our investment in the Stallingborough Sugar Hub which will bring long term benefits.”
