Real Good food shows ‘resilience’ amid tough trading

Based in Liverpool, Real Good Food exports cake and food ingredients all over the world and says it is growing stronger despite the challenges of the COVID-19 pandemic. Tony McDonough reports

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Real Good Food exports cake ingredients all over the world

 

Liverpool food ingredients business, Real Good Food (RGF), says it is getting “stronger and more resilient” despite the challenges posed by the COVID-19 pandemic.

Stock market-listed RGF comprises two distinct divisions. Renshaw is its long-standing cake ingredients and decoration manufacturer and supplies customers in the UK and across the word. Its production base is in Toxteth in south Liverpool.

It’s other division is Brighter Foods, which creates, develops and manufactures snack bars for the healthy snacks market. It operates from manufacturing facilities in Gwynedd in mid-Wales. The business employs hundred of people.

In a trading update on Wednesday, RGF said both its businesses were getting “stronger and more resilient” after a tough first half. It said near-term outlook continues to hold challenges due to COVID-19 but improved Q3 trading demonstrated encouraging progress and provides confidence for the future.

Prior to the pandemic, the firm had planned to take advantage of the investment into Brighter Foods to accelerate operational changes made within Renshaw and to generate revenue growth from new products and better customer service delivery.

However, it added that COVID-19 and Brexit uncertainties had constrained these objectives. Although the the board believes the group did well in the first half of the year to hold revenues to within 26% of last year’s £32.4m under these circumstances.

Given the operational gearing of the business, particularly within Renshaw, the reduction in revenues meant that there was a greater drop in profitability, such that the Group operated at around break-even at the adjusted EBITDA level for the first half (H1 2019: EBITDA of £2.8m).

Following the easing of some COVID-19 restrictions, Q3 (September – December 2020) revenues and EBITDA were in-line with last year’s third quarter at £19.4m and £1.7m, respectively as well as being in line with board expectations.

Renshaw’s performance improvement initiatives, which had started in 2020 have continued to focus on developing strategic partnerships with customers and distributors and driving fundamental operational improvements.

Benefits from these are beginning to come through. The business has also continued to develop and innovate new products, most notably with recent product launches in Tesco, Waitrose, and Marks & Spencer.

Brighter Foods, which ended 2020 with very significant revenue growth (25% CAGR since acquisition), was impacted by the sectors it sells into being substantially closed during the first lockdown.

However, by working closely with its customers to identify new potential outlets, the management team was successful in recovering revenues in Q2 and Q3.  By flexing its cost base, the business has remained profitable throughout the year.

Mike Holt, RGF executive chairman, said: “It is pleasing that both businesses are getting stronger and more resilient despite the current economic challenges and that the group’s Q3 performance was much improved on the first half and in line with last year and Board expectations.”

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