Real Good Food warns of full-year loss

Baking ingredients business Real Good Food warned on Monday that it will report a loss for the year as higher costs and currency movements take their toll.

In an update on trading ahead of its AGM, the AIM-listed company - which previously expected earnings before interest, taxes, depreciation and amortisation of around £6.5m in the year to March 2018 - said it expects a “materially reduced” level of EBITDA in the second half and therefore in the year to March. It now expects to report a pre-tax loss for the year.

Total sales growth in the first half was up 13% on the previous year on a like-for-like basis and up 20% including Brighter Foods. However, the company said this revenue growth is not currently being translated into greater profitability where H1 performance has been disappointing compared to the board's previous expectations, particularly in September.

“The issues being experienced include increased commodity prices from both exchange rate issues and supply restrictions as well as the disruption to production during the installation of the additional production capacity at Haydens and Renshaw creating inefficiencies,” it said.

The company said it has recognised that Head Office costs have been too high and it now plans to move from London to Wavertree in Liverpool. The group also said it has experienced significant additional costs from professional advisers as a result of needing to respond to its Corporate Governance and regulatory shortcomings.

At 1020 BST, the shares were down 12% to 22.99p.