The business – which produces goods for retail and foodservice – said investment in hot cross bun capacity and innovation had driven record production of hot cross buns at Easter, adding that it had also rolled out new muffins and doughnuts.
Announcing its preliminary results for the financial year ended July 2 2016, Finsbury reported a 24.8% increase in group revenues to £319.7m ($415m), boosted by the acquisitions of the Fletchers Group of Bakeries in 2014 and Johnstone's Just Desserts last year.
Finsbury said integrating Fletchers and Johnstone's had been a priority in the last financial year.
Unlocking synergies
“Management teams across all business have responded with energy and expertise to share knowledge, unlock synergies in a timely fashion and share best practice,” said Finsbury CEO John Duffy.
Activity has included the upgrade and on-going roll-out across the group businesses of the Fletchers IT software platform.
Finsbury has made a record £12m ($16m) annual capital expenditure, including spend on a new artisan bread bakery, the increased hot cross bun capacity and further cake automation.
The company reported 5% organic growth, which Duffy said had been “well spread” across the firm and exceeded that of the relevant markets.
Overseas sales grow 25%
Describing the 3% like-for-like growth in Finsbury’s UK bakery division as strong, Duffy added it had been “outshone by stellar growth of over 25% in the overseas division”. This had been driven by improved distribution of licensed celebration cake and free-from bakery ranges.
Finsbury’s Thorntons cake range, produced under license from the Ferrero group-owned brand, had been one of the fastest-growing line-ups in the cake category in the past 12 months, said Duffy, adding that Thorntons maintained a strong presence in celebration and snacking cake.
Finsbury Foods preliminary full-year results
Revenue: +24.8% to £319.7m ($415m)
Gross profit: +30% to £102.6m ($135m)
Adjusted operating profit: +37.7% to £17.1m ($22m)
Character licenses are also a key focus for the business, and Finsbury said particularly successful licenses in the past year had included Minions, Star Wars and Batman - all linked to big movie releases - and ‘evergreen’ licenses such as Peppa Pig.
Foodservice expansion
Finsbury continued to increase its presence in the foodservice category, which now represents more than a fifth of its business, up from nothing two years ago.
But Duffy sounded a note of caution over the impact of the Brexit vote, stating that devaluation of Sterling, if maintained, could lead to “a new era of cost inflation for many of our raw materials regardless of any potential change in consumer confidence or shopping behaviour”.
Planned increases in the UK National Living Wage would also increase costs and put pressure on margins, according to the company
“We are working hard to offset this cost inflation through enhanced internal efficiency,” said Duffy. “Inevitably such pressures are inflationary.”
Finsbury on acquisition plans
Future growth would be delivered by a combination of targeted acquisitions and organic growth, said Finsbury, adding that future acquisitions would bring diversification in product, customer or channel, or accelerate consolidation in the company’s core product areas such as celebration cakes and organic bread.
“As we are a much larger business and in a much stronger position than previously, we can be ambitious in our plans to grow the business still further,” said Finsbury chairman Peter Baker, adding that “step changes in turnover will only be achieved through further acquisitions”.
“We are clear on the areas and sectors that are attractive and our prudent approach will be maintained to ensure a clear strategic fit. We have the capability both financially and in terms of leadership to be confident in taking these steps but will do so only if the right opportunities present themselves.”