Liverpool food ingredients business Real Good Food announces further job cuts as costs soar 30%. Tony McDonough reports
Staff at Liverpool-based food ingredients manufacturer Real Good Food (RGF) are bracing themselves for further job cuts as the business battles rising costs.
In a statement to the stock exchange on Friday, Toxteth-based RGF says it is dealing with daily supply shortages and “erratic deliveries”.
Key ingredients such as sugar have doubled in prices with overall costs by around 30% this year. In May the company started a voluntary redundancy programme in May to reduce headcount by 51. However, now it says there will be further job losses but doesn’t say how many.
RGF operates two businesses. Renshaw offers cake ingredients such as sugar paste, marzipan and icings while Rainbow Dust Colours sells edible cake decorations and exports all over the world. A third business, Brighter Foods which made snack bars, was sold to Hut Group in May 2021 for £35.6m.
In April it reported full-year losses of £2.8m for the 12 months to March 31, 2022. Its said festive trading revenues were hit by “erratic” deliveries and staff absences.
Friday’s trading update said: “The group made a good recovery from COVID at the start of last year but trading conditions have been challenging since the start of the calendar year.
“These macro-headwinds, fuelled in part by the war in Ukraine, have continued through the summer. They are expected to continue for the immediate future given the wider macro-economic outlook.
“Wider economic conditions have also affected short-term demand for our products as households react to pressure on disposable incomes.”
RGF adds that for the first five months of its fiscal year to August 31, volumes were 29% down on the same period last year and 16% lower than its pre-COVID benchmark (FY20). Negotiations with customers are being “accelerated” to address the widening gap caused by cost inflation.
On the job losses it added: “The board has been working with external consultants to put into effect a more radical reform of the group to eliminate overhead costs, and to build stronger partnerships with key customers. Further headcount reductions will therefore be required.
“The recovery plan is well defined and includes significant price re-sets with customers and circa £3.2m of overhead cost savings to take the business back to profitability.
Successful implementation of the plan is expected to return between £2m and £4m in EBITDA under current market conditions.
RGF also said it was in “advanced discussions” to secure an additional £2.5m of funding to support the restructure.”