The Real Good Food Company (LON:RGD) (RGFC) is expecting strong Christmas trading, after a substantial improvement in the second half so far.
Chairman Pieter Totté told investors that RGFC is on track to meet forecasts for the current year and he sees significant growth in the year ahead.
RGFC is made up of three principal businesses. Napier Brown - a non-refining sugar distributor - is the largest, contributing around 75 percent of revenues. The group also comprises an ingredients operation called Renshaw and Hayden’s which makes high quality patisserie and desserts for Waitrose and Marks & Spencer.
Napier Brown sells to the big consumers such as United Biscuits, Nestle and Mars as well as the smaller food companies and also trades under the Whitworth brand, which is stocked by supermarkets and corner shops.
"Our three businesses have each made great strides during the year towards achieving our vision for their successful and profitable future growth,” Totté said.
“Dramatic changes to the world sugar market point to significant prospects at Napier Brown. Renshaw is successfully exploiting new markets while Hayden's has secured the space to expand and modernise its business.”
According to RGFC, Napier Brown has seen a substantial improvement in the prospects for the sugar business, which has had a transitional year due to major changes to the EU’s sugar regime.
After the significant pressure on prices and margins early in 2010, Napier Brown it is now seeing strong growth driven by a global shortage in sugar supply – which has in turn pushed prices to a 30 year high.
RGFC highlighted that the turnaround, which has been underway since October, will leave it well positioned for 2011 but it will not have a major impact on the group’s results for 2010.
Shore Capital analyst Phil Carroll emphasised that the outlook for RGFC looks positive, with each division moving forward simultaneously to drive a strong bottom line performance.
“We believe today’s statement shows RGF is now nearing the light at the end of the tunnel following a transitional period and we remain confident in its prospects,” Carroll said in a note to clients.
He adds: “we are upgrading our earnings forecasts for 2011F and 2012F by 35% and 50% respectively.”