Sugar Dispute Results in Losses at Real Good Food Company
UK diversified food business The Real Good Food Company has reported a loss before tax and significant items of £1.0 million for the year ended 31 March 2014 due to a reduction of £7.6 million over the previous 12 months driven by a £7.2 million EBITDA reduction mainly in its Napier Brown and Garretts Ingredients businesses, which have been adversely impacted by a dispute with British Sugar, part of Associated British Foods.
The Real Good Food Company is a major distributor of sugar in the UK, and manufactures a wide range of baking ingredients, jams and sweet bakery products. Its portfolio of brands includes Whitworths Sugar, Renshaw and R&W Scott.
Group revenue from continuing operations for the year increased by 2.6% to £272.6 million reflecting overall volume growth across the group. Movements in base commodity costs in the year were managed effectively across the divisions with the exception of Sugar where the market reductions were not fully reflected in the group’s purchase price triggering the dispute with British Sugar.
“It would be easy to focus on the impact on our results caused by what we believe to be anti-competitive behaviour by British Sugar,” comments Pieter Totté, chairman of The Real Good Food Company. “The reduction in group EBITDA to £3.3 million hides significant progress in a number of operating divisions. In particular, the Renshaw result was very encouraging, while at Haydens it is clear that the new business model is beginning to deliver.”
He adds: “We remain in close dialogue with the Competition and Markets Authority and are hopeful that the regulator will take the necessary steps to ensure that competition law is enforced.”
However, the current sugar contract year does not end until 30th September, coinciding with the group’s half year, so despite continued strong trading at Renshaw and Haydens, the first half performance will still be materially affected.
