Real Good Food hails improved third quarter
AIM-listed food ingredients business Real Good Food said on Wednesday that while the near-term outlook remains challenging due to the Covid-19 pandemic, it is confident about the future following improved third-quarter trading.
In an update for the year to the end of March 2021, the company said its two businesses are getting stronger and more resilient after a tough first half.
The group had planned for the current financial year to leverage the capacity investment made during FY20 in Brighter Foods, to accelerate operational changes made within Renshaw and to generate revenue growth from new products and better customer service delivery.
However, it expressed its frustration that the pandemic and Brexit uncertainties have constrained these objectives, "albeit the board believes the group did well in the first half of the year to hold revenues to within 26% of last year under these circumstances".
Given the operational gearing of the business, particularly within Renshaw, the reduction in revenues meant there was a bigger decline in profitability, with the group operating at around break-even at the adjusted EBITDA level for the first half, versus £2.8m in the same period in 2019.
The company said that after some restrictions were eased, third-quarter revenues and EBITDA were in-line with last year's third quarter at £19.4m and £1.7m. They were also in line with board expectations.
Executive chairman Mike Holt said: "It is pleasing that both businesses are getting stronger and more resilient despite the current economic challenges and that the group's Q3 performance was much improved on the first half and in line with last year and board expectations.
"The board remains committed to reducing the group’s debt burden and reviewing all initiatives to improve its capital structure."
At 1150 GMT, the shares were up 5% at 420p.