New look Real Good Food (LON:RGD) is confident on future growth although increased investment has hit short-term margins and thus it expects final profit for its 2016 year to fall short of market expectations.
The current year to end March has seen the firm transition and reorganise into three main pillar markets. These are cake decoration, food ingredients and premium bakery.
Last summer it sold its sugar division Napier Brown for a total consideration of £44.4mln.
"The board now expects that within the continuing business, EBITDA will remain flat year on year, as this investment, when combined with other one-off events within the various business divisions, has led to a short term impact on margins.
"As a result the board does not expect the final profit outcome for the financial year ended 31 March 2016 to meet current market expectations," it told investors today.
But the Napier Brown sale delivered an exceptional profit of £9.4 mln in the period, which means it expects total group pre-tax profit and EPS at the year-end to be significantly improved when compared to the previous year.
"In addition net borrowings for the Group will be substantially reduced following the inflow of the £44 million from the Disposal, which has enabled the group to repay all of its PNC borrowings," it added.