- Record annual revenue reported
- Margins down modestly
- Warning of worsening pressures
Speciality bakery business Finsbury Food (FIF:AIM) may have just unveiled a record revenue performance but it was the warning on inflationary pressures which caught the market’s attention.
In turn the shares dropped 2.6% to 76.4p. The sell-off was at least pretty modest, particularly given a volatile market backdrop, and reflects what was a actually a fairly robust set of results for the 12 months to 2 July.
The company was able to push through price increases and keep gross margins relatively stable at 32.4%, down from 32.9% for the previous financial year.
Group revenue was up 13.9% to £357 million and pre-tax profit increased 12.1% to £17 million. Net debt widened from £13.1 million to £20.6 million.
CONDITIONS EXPECTED TO WORSEN
However, while hailing the company’s resilience, chief executive John Duffy did concede that significant input costs and weakening consumer confidence were headwinds which ‘are expected to worsen’.
He added: ‘We will continue to meet challenges head on, and I remain confident we will emerge a stronger business well set to deliver on our long-term growth ambitions.’
Panmure Gordon analyst Matthew Webb commented: ‘Once again FIF has shown its resilience, this time through its ability to pass on unprecedented cost pressures with price increases averaging 9% over the second half. It has also negotiated a £30 million increase in its credit facilities, showing strong support from its banks.
‘This facility also increases the scale of acquisitions that Finsbury could make without having to issue equity at the current lowly valuation. In the light of these positive points, we find Finsbury’s valuation increasingly difficult to understand.’
