Ingredient price rises a concern for Real Good Food

2nd Feb 2017 12:29

(ShareCast News) - Real Good Food updated the market on its trading on Thursday, having previously indicated that it makes the majority of is profits in the second half of the year, which includes the important third quarter trading period for cake decoration and premium bakery in the run up to Christmas.The AIM-traded company confirmed that indication with overall sales continuing to grow and were strong in Q3, up 8% year-on-year."As widely reported elsewhere, the overall trading environment for food manufacturers remains difficult with the biggest factors affecting Real Good Food being the short term impact of high commodity prices, especially butter, sugar and oils, all key ingredients for the group, and a weakening of sterling post Brexit," the board said in a statement."The cost of butter in particular has more than doubled in price."It said the timing of those factors was "unfortunate" as it coincided with Q3, and adversely impacted EBITDA margins."Notwithstanding this margin pressure, the company remains confident that it will be reporting revenue and EBITDA for the full year in line with current market consensus."In common with its competitors, Real Good Food - having examined all options to mitigate the impact - said it has now implemented targeted price increases, and expected margins to be largely restored by the start of the next financial year.