Finsbury Food Group to Close Factory
Finsbury Food Group, the UK speciality bakery manufacturer of cake, bread and morning goods for both the retail and foodservice channels, has decided to close its Grain D’Or factory. The closure, which is anticipated to be completed by 2 December 2017, means that the company will benefit from not supporting the losses associated with the factory. This fits with the company’s strategy of focusing investment behind profitable product niches to drive long term market growth and value within specialty bakery
Grain D’Or has been historically loss making and for the 12 months ended 30 June 2017 it reported an operating loss of £3.33 million on revenues of £28.5 million. Due to the products it produces, Grain D’Or trades in a particularly competitive environment which creates strong competition for contracts and loss-leading pricing. With this in mind, and together with the cost issues being experienced across the industry, Grain D’Or has lost two large contracts since the year end, impacting its financial performance further. Finsbury Food Group believes the exceptional cash costs associated with the closure of Grain D’Or could reach up to £10 million, spread over a period of up to seven years, but expects it more likely to be in the region of £6 million. The company will benefit from the cancellation of planned capital investment programmes in Grain D’Or, which were significant.
