250 jobs at risk at firm’s struggling pastry branch
The Finsbury Food Group has announced plans to close one of its pastry making subsidiaries in a move that puts 250 jobs under threat.
The Cardiff-based baked goods manufacturer yesterday announced proposals to close its Grain d’Or business, which is based in Brent, London.
Finsbury blamed recent losses despite a “range of initiatives” designed to improve performance, and said business had been “historically loss making”.
It is entering a formal consultation period with the 250 staff employed at Grain d’Or.
Grain d’Or provides premium baked goods for the pastry sector.
A statement to the London Stock Exchange Finsbury Food said: “The company has proposed the closure of Grain D’Or as the business has been historically loss making.
“In recent years, the company has implemented a range of initiatives to improve the business including strict cost controls and introducing new working practices.
“Despite this, during the 12 months to July 1, 2017, Grain D’Or generated £28.5m in revenue but produced an overall operating loss.”
In a recent trading update, Finsbury Food said total group revenues had grown 0.3% to £314.3m in the year to July 1. On a constant currency basis, revenues decreased 1.1% like for like on the previous year.
The group said at the time it was confident of delivering profits in line with market expectations.
While Grain D’Or had been struggling for years, it is understood that the Brexit-hit pound has been an added drag on the business.
Market jitters have resulted in a major devaluation of the pound in the wake of the Brexit vote, with the UK currency dropping from pre-referendum high of 1.31 against the euro to eight-year lows of 1.08.
Sterling’s drop has resulted in surging inflation, with input costs becoming more expensive for the likes of manufactures and food suppliers.
Those rising costs sent Kent-based food supplier South Salads into administration earlier this month, resulting in 260 job losses. It came after Southern Salads failed to negotiate new pricing terms with its own European suppliers of fruit and vegetables. Without sufficient currency hedging in place, the salad and veg business collapsed under rising costs.
Finsbury Food Group stressed that the proposed closure of Grain D’Or was not a sign of bigger issues at the business.
“Finsbury is a strong multi-channel business and a large diversified speciality bakery group. As outlined in its recent trading update, on July 17, 2017, the group is performing well.
“The board believes that, despite the current pressures on the industry, it is well equipped to maintain its market-leading position and continue to deliver growth and improved shareholder value over the period ahead.”
Grain D’Or operates two bakeries at its London site, employing more than 200 people to produce a wide range of bakery products. Established in 1980, it balances automation with hand craft skills to produce premium products for the retail and food service channels.
A wide range of products are produced at the two bakeries including croissants, American muffins and speciality breads, and supplied to major retailers and food service customers in the UK.
Steve Finn, a regional officer for the Bakers, Food and Allied Workers Union, blamed the closure in part on the failed renewal of key supermarket contracts that accounted for around 60% of Grain D’Or’s volumes.
“It would seem that the company has been working hard to try and turn things around, only to see two of its biggest customers, Marks & Spencer and J Sainsbury, decide to move products to other manufacturers,” he said in a statement.
The company already had suffered following a similar move by Tesco in 2012, which resulted in a “number of redundancies”, Mr Finn added.
The union has since tried to ease wage pressures, agreeing to change some “long-standing working arrangements” as part of this year’s pay negotiations. Mr Finn said Finsbury Food’s announcement marked a “sad day” for Grain D’Or employees.