TIDMFIF
RNS Number : 7892H
Finsbury Food Group PLC
27 March 2020
Date: 27 March 2020
On behalf of: Finsbury Food Group Plc ("Finsbury", "the Company"
or "the Group")
For immediate release
Finsbury Food Group Plc
Trading and COVID-19 Update
Finsbury Food Group Plc (AIM: FIF), a leading UK speciality
bakery manufacturer of cake, bread and morning goods for both the
retail and foodservice channels, provides the following update in
light of COVID-19.
Trading
Following the strong results announced in February, trading in
the first two months of the second half of our financial year was
tracking in line with market expectations.
Since then, as the effects of COVID-19 on the UK and Europe have
become more pronounced, and with the UK government taking the
decision to close food outlets, schools and other public places
where food is provided, our UK foodservice business, which
accounted for approximately 20% of total Group revenue in FY19, has
seen a significant reduction in demand.
While the performance of the largest part of the Group, retail,
is proving resilient with overtrade in bread and pockets of
weakness in cake, trading in our foodservice business is likely to
continue to be significantly impacted in the immediate term as a
consequence of the closures. We are in the very early stages of
understanding the impact of the virus on our business and, with the
situation being as fluid as it is, it is not currently possible to
provide guidance on future earnings.
Response to COVID-19
A s a manufacturer of a wide range of baked goods, we are
committed to playing our part in ensuring the UK's supermarkets
have the food stocks needed at this time of unprecedented demand.
The health and safety of our employees is our top priority, and we
continue to adhere to the UK government's rules and guidelines,
with extensive procedures in place across our sites.
Considering the actual and anticipated change in demand across
the business, the Board is taking actions to manage short-term
costs, while ensuring the business remains on a sound footing to
deliver on its longer-term growth ambitions. These include:
- Temporarily suspending production at our Kara site in
Manchester whilst continuing to service customer sales from stock
(Kara is solely focused on the foodservice channel) and reviewing
shift patterns and production elsewhere as sales dictate;
- The freezing of all discretionary expenditure and capital investment; and
- Careful management of cash resources.
The Board has also taken the decision to withdraw its proposed
interim dividend, as announced on 24 February 2020. While we remain
committed to the payment of dividends, we believe it is prudent to
conserve the Group's cash at this time of heightened instability.
The Board will assess the Group's cash position and the outlook for
the business at time of the full year results, and will adjust its
approach to the final dividend accordingly.
Financial update
At the end of December 2019, the Group had net debt of GBP32.5
million. The Group has extensive headroom in its facilities, with a
GBP55.0 million revolving credit facility and an accordion of
GBP35.0 million.
We have strong relationships with our three banks and have been
in regular dialogue with them since the onset of COVID-19. They
remain highly supportive and the Board is comfortable that it will
be able to manage the situation from its current financial
position.
Outlook
Until we have more visibility over the COVID-19 situation, we
will continue to manage the business with a view to securing
maximum stability in the short term for shareholders, employees,
customers and suppliers and will provide the market with updated
guidance on performance as and when appropriate.
While the virus will continue to have an impact on normal
trading patterns in the near term, the fundamentals of the business
remain sound, and the Board is confident in the Group's ability to
withstand the current situation and deliver on its long-term growth
ambitions.
John Duffy, CEO of Finsbury Food Group, said:
"Despite the Group's short-term performance being difficult to
predict with any certainty until we have a clearer picture of how
COVID-19 will develop, we are encouraged by the healthy demand we
continue to see in the larger retail side of our business.
"While the coming weeks and months are likely to be some of the
more turbulent we've seen, the fundamentals of the business remain
sound and we see no reason to believe the virus will damage the
longer-term value proposition of the business.
"Our employees across the Group have thus far risen superbly to
the challenge, and I would like to take this opportunity to thank
them all for their continued hard work and dedication at what is an
extremely difficult time, and to reassure them that their
well-being continues to be our priority."
ENDS
This announcement contains inside information.
Contact:
Finsbury Food Group
John Duffy (Chief Executive)
Steve Boyd (Finance
Director) www.finsburyfoods.co.uk 029 20 357 500
Cenkos Securities
Max Hartley (Corporate
Finance)
Alma PR
Rebecca Sanders-Hewett
Sam Modlin
David Ison finsbury@almapr.co.uk 020 3405 0205
Notes to editors:
-- Finsbury Food Group Plc (AIM: FIF) is a leading UK
manufacturer of cake and bread bakery goods, supplying a broad
range of blue chip customers within both the grocery retail and
'out of home eating' foodservice sectors including major multiples
and leading foodservice providers.
-- The Company is one of the largest speciality bakery groups in
the UK and, with its Overseas division, has sales in the financial
year ending 29 June 2019 exceeding GBP315m.
-- The Company's bakery product range is comprehensive and includes:
o Large premium and celebration cakes.
o Small snacking cake formats such as cake slices and bites.
o Artisan, healthy lifestyle and organic breads through to
rolls, muffins (sweet and savoury) and morning pastries, all of
which are available both fresh and frozen dependent on customer
channel requirements.
o Gluten Free bread, morning goods and cake ranges.
-- The Company is one of the largest ambient cake manufacturers
in the UK, a market valued at over GBP965 million (source: 52 w/e
7th December 2019). The retail bread and morning goods market has a
value of GBP4.6 billion (source: Kantar Worldpanel 52 w/e 29th
December 2019). The retail Free From Cake market is valued at
GBP51.7 million (source: Kantar Worldpanel 52 w/e 29th December
2019). The retail Free From bread & morning goods market is
valued at GBP130.2 million (source: Kantar Worldpanel 52 w/e 29th
December 2019).The UK Out of Home sector Foodservice Bakery sector
is worth approximately GBP764 million per annum (source: UK
foodservice data derived from MCA data for 52 weeks to 30th June
2019). The UK foodservice cake and sweet morning goods bakery
sector is worth approximately GBP941 million per annum (UK
foodservice data derived from MCA data for 52 weeks to 30th June
2019).
-- The Company comprises a core UK Bakery division and an Overseas division:
o The UK Bakery division has manufacturing sites in Cardiff,
East Kilbride, Hamilton, Salisbury, Sheffield, Manchester, and
Pontypool.
o The Overseas division comprises the Company's 50% owned
company, Lightbody Stretz Ltd, which supplies and distributes the
Group's UK-manufactured products and third party products,
primarily to Europe, and the Company's manufacturing facility in
ywiec in Poland.
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END
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