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The Real Good Food Company now well placed, say analysts

The Real Good Food Company now well placed, say analysts

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Food producer The Real Good Food Company (LON:RGD) is confident it will meet its expectations for 2012, as it released positive numbers for its second half.

The group, whose operations span sugar distribution, cakes and bakery supplies, said sales growth and value added activities lifted EBITDA to £6.4 million in the six months to Dec 31.

This was a 28 per cent increase on the comparable period in 2010, which stood at £5mln, the company said.

For the year as a whole, corporate profit before tax stood at £5.7 million, which was in line with market expectations but up 148 per cent on 2010.

EBITDA for the year was £9.1 million - a 62 per cent increase on last year.

The key trading divisions of Napier Brown (sugar) Garretts (dairy ingredients) and Renshaw (bakery ingredients) all increased their EBITDA performance year-on-year, the company highlighted.

Napier Brown has successfully extended its sugar supply base.

The hand crafted bakery business Haydens and the re-established R&W Scott, which specialises in chocolate coatings, jams and blends, were affected by increased commodity costs, which were not recovered in pricing until late in the year.

Executive chairman Pieter Totté said: "We are now seeing major benefits coming through from our dual-track programme of adjusting to the structural change affecting our biggest business, Sugar, and implementing strategic initiatives across all our other  businesses.

"We are focused on creating solid sustainable profitability based on brand development, growth and risk management. I am extremely pleased that the progress we have made is reflected in a significant improvement in our financial performance during 2011.

"With trading starting positively in January, and divisional management achieving further progress in their improvement programmes, I am confident in meeting our expectations for 2012."

"We believe the company has now come out of the end of the tunnel following the structural changes to the EU sugar market, and as a result of its strategic changes it now looks to us to be well placed to continue making progress going forward," said analyst Phil Carroll at house broker Shore Capital.

Meanwhile, broker Killik and Co said that after three years where trading had been overshadowed by the impact of EU sugar reforms, it believed the firm was now well placed to make significant operational progress.

"The medium-term aim is to more than double revenues and EBITDA margins to around £500 million and 6 per cent, respectively, by calendar year 2014.

"Furthermore, management proposes to achieve these goals by entirely organic means, without mergers, acquisitions or dilutive fundraisings, and whilst keeping gearing around current levels."

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Pieter Totté, chairman, said: "Now that the disposal of Napier Brown has been completed, we can focus on developing our other businesses, all of which present growth opportunities. "The performance of our cake decorating businesses continues to be encouraging, while Haydens is also trading strongly as it broadens its customer base.

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