Cake maker's revenues jumped 25% in another strong year for the AIM-listed company
Companies: Finsbury Food Group
Finsbury Food Group Plc (LSE: FIF), the UK-based speciality cake and bread manufacturer, has announced its preliminary results for FY16 this morning, reporting another big year for the company with revenues up 25% and gross profit up 30% YoY.
The AIM-listed company increased group revenue by 24.8% to £320m, gross profit by 30% to £102.6m, and operating profit by 34.7% to £16.7m, with the strong growth also reflected in adj. diluted EPS, up 19% to 9.5p per share, and final dividend growth of 12% to 2.8p.
The group's cash position is solid, with net debt standing at just 0.8x EBITDA, £19.7m, well within its £51m banking facility. The period also saw Finsbury invest a record £12m "to ensure long-term competitiveness".
City stockbroker Panmure Gordon said the results attested to FIF’s evolution into the UK’s leading speciality baked goods manufacturer. This has been achieved, according to Panmure, through a "consistent and unrelenting focus" on customer needs, product innovation, and investment:
"The shares have been very strong recently (c.10% in the last month, thereby delivering +20% outperformance relative to the wider stockmarket over the past year) and have pushed beyond our 127p TP. Combining this with the lack of an upgrade to our FY17E PBTA, the shares may therefore pause for breath. We remain however very positive on FIF given: (1) its dominant scale to capture the available long-term growth opportunities; (2) its valuation discount (c.15%) to its small/mid cap peers; and (3) the likely M&A momentum/ optionality as an added investment attraction."
The latest preliminary figures are particularly positive considering the strong results the group posted last year when it saw revenues increase 45% and pre-tax profits increase 29%. The growth has in-part, been driven by the £56m acquisition of Fletchers in 2014, which made the company one of the largest speciality bakery groups in the UK.
The annual retail bread market in the UK is worth £4bn and the cake and sweet bakery sector is worth c.600m per year, meaning the group has ample room for growth within the growing market.
CEO John Duff said there had been significant top and bottom line growth, due to considerable efforts across the whole Company. He said the business had a robust balance sheet which positioned it well to take advantage of growth opportunities and mitigate challenges ahead:
"If 2015 was all about transformation for the Group, then 2016 has been about delivering on our growth strategy and moving even closer to our vision of building the leading speciality bakery group in the UK focused on quality products...
The integration of Fletchers and Johnstones has been one of our priorities, and we continue to invest across all aspects of the business, diversifying into new channels and widening our customer base, to deliver a stronger platform for future growth and ensure our long term competitiveness..."