Food manufacturer welcomes ‘crisis’ to enable transformation

Food manufacturer Real Good Food has revealed it lost £3.8m in six months, which it said has allowed it to begin “a radical programme of reform”.

The pre-tax losses were more than treble the levels seen in the same period a year earlier.

Real Good Food’s executive chairman Mike Holt said: “The simple truth, a crisis was needed to enable the required changes to be possible.”

Liverpool-based Real Good Food is a food ingredients business which specialises in cake decorations under its Renshaw and Rainbow Dust brands.

Sales were down 20% to £15.9m and margins came under pressure because of reduced volumes and the time it took to pass cost increases on to customers.

It has also been hit by “ongoing availability of key ingredients”, although the company said this had eased in recent weeks.

Holt added: “Market conditions have been very challenging over the last twelve months, and show no sign of easing in the near-term, due to a perfect storm of rising costs and lower revenues.

“The group is not just hunkering down, it has put into effect a radical programme of reform to return it to profitability and to ensure that profits will be sustainable.”

The recovery plan includes significant price re-sets with customers – which it has now secured with “most” of the UK retailers it supplies – and £3.0m of cost savings and efficiency gains.

Successful implementation of the transformation plan is expected to return between £2.0m-£4.0m in earnings.

The plan is supported by an additional £2.5m revolving credit facility which it secured in November.

Real Good Food’s share price is down more than 50% in 2022, despite being at the tail of seven years of decline that has removed almost all of the value out of the business.