The closure comes as losses swell and costs rise across the industry.
Companies: Finsbury Food Group Plc
Despite generating £28.5m in Revenues for the 12 months to June, it operated at a loss of £3.3m, due to increased costs and competition, bolstered by the loss of two large contracts.
The announcement also said:
"The Company believes the exceptional cash costs associated with the closure of Grain D'Or could reach up to £10 million, spread over a period of up to seven years, but expects it more likely to be in the region of £6 million."
They also noted that the closure of the factory, which is anticipated to be completed by December 2, will benefit the company with the cancellation of "significant" capital investment in Grain D'Or.
It also warned that adjusted profit margins for FY18 will be achieved from a lower revenue base, with increasing costs a contributing factor.
Shares in FIF were down 4% in early trading this morning at 104p.
The stock enjoyed steady growth in the five years to 2016 but has suffered this year due to cost inflation and several documented industry-wide issues. The Group currently trades at a PE ratio below the industry average, 10x versus 16x respectively.
In the five years to 2017 FIF experienced a Revenue CAGR average of 11% and a Net Profit CAGR average of 16%.