Real Good Food not so sweet on sugar unit

FOOD manufacturer and supplier Real Good Food could be set to sell its sugar distribution business Napier Brown amid tough trading condutions in the sector which have caused it to sound a profit warning.

The Liverpool company said price falls in the EU sugar market meant Napier Brown had a “very poor first half”, and while it has returned to profit in the second half, it is looking to possibly sell the business.

Shares fell 6p or 14% to 36p on the news.

Based in Normanton, Yorkshire, Napier Brown is Europe’s biggest non-refining sugar distributor and also owns the Whitworths brand.

Real Good Food said: “The company is in discussions with several parties in relation to a potential transaction involving Napier Brown. Such a transaction, if successfully concluded, would enable the company to significantly strengthen its balance sheet and focus on more stable earnings growth going forward.”

As a consequence of the trading challenges in Napier Brown, RGF said its earnings in the year to March 31 would be “significantly behind market expectations.”

Aside from the sugar business, the reaminder of the group performed strongly and ahead of management expectations, with Renshaw (baking ingredients) and Haydens (manufacture of chilled and frozen patisserie and dessert products) in particular performing well.

Executive chairman Pieter Totté said: “‘The difficulties in the sugar market have been covered extensively elsewhere but there are signs that prices have reached their low point and will recover over the next two years.

“As stated, we are examining options for our sugar business. Elsewhere I am delighted with performance in two areas in particular: in cake decoration, Renshaw has performed very strongly and our recent acquisition of Rainbow Dust Colours is already giving us sales opportunities both in the UK and across Europe, while in premium bakery, Haydens has continued to trade well, successfully expanding its customer base.

“We plan to give additional focus to these attractive sectors over the coming year.”

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