Inter Link Foods, a UK manufacturer of private label, branded and licensed cake products, said that sales in the first half of the financial year were lower than expected, in part due to the “unprecedented” high temperatures from July to October.
During 2006, the company has doubled its capacity to produce the Soreen malt loaf product.
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Inter Link said there have been delays in Christmas orders going into stores compared with last year, but that sales for November and December saw a strong bounce-back, up 15% compared to last year.
The company said that these increases would bring the sales performance for the eight months of this year back in line with last year.
Turnover in the half-year period was down 6.8% to GBP62.55m, despite an increase in gross margins from 36.6% last year to 37.2% this year.
In July 2006, Inter Link announced the closure of the Hoppers Bakery in Herne Bay and the transfer of the business to its sites in Blackburn. The closure will take place in February 2007 and result in exceptional costs and asset write-offs in the region of GBP1.175m.
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By GlobalDataThe company said that unlike the situation with some of its previous closures, it will be difficult to redeploy staff at an alternative bakery, but added that the resultant cost savings could be in excess of GBP1m during the next financial year.
The company said it has continued the process of transferring most of its major customers to a new central distribution centre in Warrington, and remains on course to transfer the remainder in January 2007.
The Inter Link board increased its interim dividend by 4% to 2.60 pence, which will be paid on 16 March 2007 to members on the register on 16 February 2007.
In its outlook, Inter Link said it has seen 15% sales growth in the eight weeks to 30 December, bringing sales for the first eight months of the financial year back in line with those for the previous year, as the total UK Cake Market continues to grow at 4.7% over last year.
The company noted that the second half had begun well but remains a difficult challenge, although it remains optimistic over the increased availability and demand for Soreen products.
“Our objective for the business continues to grow organically and as a result of selective acquisitions. However, this is combined with our ongoing focus on creating a more efficient and cost effective business, and to this end we will continue our programme of factory consolidation together with the development of our central operation and logistical infrastructure,” the company said.
The company also announced the appointment of Brendan Hynes as its new group finance director.
