Liverpool food ingredients manufacturer emerges from the most turbulent period in its history and vows to continue manufacturing through the coronavirus crisis. Tony McDonough reports
Liverpool food ingredients manufacturer Real Good Food (RGF) is reporting rising revenues and margins as it emerges from the most turbulent period in its history.
And the firm says its factory in south Liverpool is continuing to produce its food ingredients and cake decoration range despite a severe downturn in the economy due to the coronavirus lockdown.
In a trading update to the Stock Exchange on Wednesday, the AIM-listed business reported that revenue for the 12 months to March 21, that revenues were up 9% to £67m and adjusted EBITDA had risen by 178% to £5.4m.
Revenue in its Brighter Foods division were up year-on-year by 67%, securing a new contract with a global customer, that started in January of this year whilst benefiting from continued organic growth with existing customers. Brighter started producing products on its new production line and efficiencies were delivered in line with expectations.
RGF’s Cake Decorations business has come under pressure owing to the declining market for sugar paste (-14.7%) and marzipan (-2.1%). However, frostings are a growing market and the business is well placed in this segment following recent investment.
Revenues in the US and Europe are broadly in line with expectations; Cake Decorations has reduced overheads by 11% and will continue to review its cost base this year and into 2021.
The company expects there to be a “material impact on sales’ due to the coronavirus at least in the first quarter of its financial year. In the statement, it said: “Our priority is the safety of our staff whilst still supplying our customers with the highest quality product.
“We are following all Government guidelines, with most back-office staff now working from home and full risk assessments completed in terms of social distancing at our manufacturing sites.
“The recent IT upgrade at Renshaw’s has enabled home working and the ability to hold virtual meetings with our international customers and colleagues (Brighter was already well invested in this area). In light of lower demand, production planning is being reviewed in consultation with customers to rationalise the products we are making.”
In July last year the business, which employs hundreds of people at its Toxteth base, was fined £450,000 by the London Stock Exchange in a ruling that saw its founder and former chairman come in for heavy criticism. The LSE identified “serious failings” in relation to a trading update in 2017.
The latest update shows RGF is now moving on from that period. Non-executive chairman Mike Holt said: “We are grateful to our staff and stakeholders as we work together through this challenging period.
“The budgets we were signing off just a short time ago are now being updated to include all the measures we are taking to ensure that the group has a sustainable business going forward.
“We believe the food industry is resilient and that Real Good Food is well placed within the segments we serve and given the quality of our products and operations.”