Lightbody owner Finsbury Food takes top-line hit but underlying sales grow

● Chief executive highlights the soaring cost of many ingredients, including butter

Bakery products supplier Finsbury Food Group has seen its profits crumble by twothirds as the company contended with “unprecedented” inflation and the closure of its loss-making pastry factory.

The firm – a major employer in Scotland with hundreds of staff across its Lightbody cakes business in Hamilton and Johnstone’s in East Kilbride – reported a drop in pretax profits to £4.5 million for the year to the end of June, while group revenue dipped 3.4 per cent to £303.6m.

However, stripping out the impact from the closure of its loss-making Grain D’OR factory last autumn, like-for-like revenue was up 2.4 per cent at £290.2m while pre-tax profit lifted 4 per cent to £17.2m.

The group described the results as a “resilient performance” given the “volatile” retail market and “unprecedented inflationary environment”.

It said it had to contend with a notable cost inflation of ingredients, including butter, which compounded pains at the now closed Grain D’OR operations.

Chief executive John Duffy said: “The escalating butter price – triple what it was just a few years ago – ultimately led to uncompetitive pricing, lost contracts and widening financial losses at our London bakery, Grain D’OR.

“With the losses caused by the butter increase, we had to change our commercial plans. This precipitated the difficult decision to close the business in the first half, following extensive employee consultation.”

Finsbury said it was now exploring further acquisitions, but expects organic growth to be “steady”, which the chief executive said “is no bad thing in the market we’re in”.

Ian Forrest, investment research analyst at The Share Centre, said: “The company has had to close a number of bakeries during the year and is coping with sharp rises in commodity and labour inflation, but it said today that it expects steady organic growth in future and is increasingly focused on ‘free from’ bakery items. The shares have outperformed the market so far this year but remained flat in response to today’s news.

“These are good figures and show that while the company has had to make some changes and is facing a challenging market in some respects it is adapting to new trends such as free from.

“The dividend was raised and we continue to recommend the shares as a ‘buy’ for higher risk investors seeking growth due to the potential for the UK and European businesses, diverse customer base and good relative value.”