Finsbury fights off escalating costs
1 min read
Cake-maker Finsbury Food said today it was fighting dramatic increases in the price of core commodities by passing these costs on to customers but time lags would cause a £1.5 million shortfall in margins in the year to June, though this was countered by cost controls.
In an update on trading, the leading manufacturer of premium and celebration cakes, low fat cake slices, artisan and organic breads, morning goods, and a range of gluten free bakery products, said sales had remained strong with excellent growth in all subsidiaries.
During the financial year, there had been a well documented and dramatic increase in the prices of core commodities such as wheat, dairy produce and eggs, Finsbury said. While the group was successful in passing these costs on to its customers, the speed of increase was unprecedented and a natural time lag in achieving selling price increases had led to Group margins being reduced by over £1.5 million though this had been compensated for by strict overhead cost control.
There was still upward pressure on input prices with many commodities remaining volatile and this was in addition to continued supply chain pressure caused by rising fuel and energy prices, coupled with the weakening of Sterling.
The update insisted the underlying fundamentals of the group remained strong and it still expected growth in earnings during the coming 12 months. However, this was likely to be slower than recent growth because of inflation and uncertain consumer spending patterns. There were certain macro economic factors in the global and UK economy outside of the company’s control, Finsbury said.
Chief executive Dave Brooks, said: "In times of uncertainty, understanding the consumer, being flexible and having good innovation skills are the most important assets a business can have. In Finsbury, these are three of our core skills and our ability to move with market fluctuations will be our strength in the next twelve to eighteen months.
"Our sales growth prospects remain very positive over the coming year with major range relaunches either in progress or planned with all of our major customers. We are also the beneficiaries of some very strong licensing partnerships with major brands such as Weight Watchers, Thorntons, Disney and Nestlé . . . all of which can offer something new in our core areas.
"The next 12 to 18 months will see a tough trading environment, though such conditions also contain significant opportunities for the best businesses to seek out and thrive. Our goal is to ensure we are one of those businesses."
