Real Good Food Company serves up strong half year performance

Bakery ingredients group Real Good Food Co (LON:RGD), has reported “good trading progress” during the first six months of the year, with a continuation of strong sales growth at Renshaws, its baking ingredients business, and at Hayden's Bakeries. Lower prices have impacted overall turnover in the Napier Brown sugar business, but a tightening of the supply position is expected to lead to a recovery in pricing levels at the start of the new contract season in October.

Napier Brown is the largest independent non-refining distributor of sugar in Europe, while RGF’s other businesses supply bakery ingredients and manufacture sweet bakery products for a range of major retail customers. During the first half of the year the group maintained its strong focus on cash during the half year, and achieved a £1.5m reduction in working capital year on year, while total group borrowings are £2.3m (8%) lower than June last year.

RGF’s sugar business is in a transitional year, following the EU sugar regime changes, and has experienced significant pressure on retail prices, where margins have been tight during this year. However, the tightening supply position is expected to push prices up during the second half of this year. Elsewhere, Renshaws has continued to see growth in volumes and profitability at levels well above management expectations, with sales overall up 14% year on year. Key features of this improvement have been strong export sales and the growing popularity of home baking and sugar craft in the UK. A range of new branded products are being launched during the second half of the year, traditionally the key sales period for this business.

Finally, a newly-assembled management team at Hayden's Bakeries is achieving a turn-around of this business, with overall sales up 20% in the half year and plans for expansion into additional premises and modernisation of the plant well under way. Like Renshaws, the all-important sales period for this business is the pre-Christmas final quarter of the year.

Pieter Totté, RGF’s executive chairman, said: “I am delighted by the ways in which we are starting to realise the full potential of our three businesses. At Renshaws we are successfully exploiting the growing market at home and overseas for home baking, as well as building a branded business; at Hayden's we are building ever stronger relationships with our key customers, and at Napier Brown we are poised to benefit from a long-awaited turn-around in the sugar market, following the EU-led cuts in supply levels. We look forward to the seasonally-stronger second half with considerable confidence.”