A Liverpool firm specialising in cake decorating ha vowed to "hunker down, control costs and protect revenue" after suffering a "difficult" final six months of its latest financial year.
Real Good Food, which is based in Wavertree, added it is focused on "reducing complexity and waste, other cost saving projects and selective new product launches to make the business as competitive as possible" because of the "challenging environment" of costs and demand pressures.
The AIM-listed business had previously said it had performed strongly during the first half of its year to March 31, 2022, with its revenue and EBITDA "well ahead" of the prior period and back to pre-Covid levels.
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However, its third quarter revenue was "disappointing and well below expectations" because of "severe shortages and erratic deliveries of key ingredients and services, compounded by high absence rates because of the Omicron variant".
Real Good Food said these factors affected its ability to fulfil customer orders.
The company added that its trading during the final quarter, and in the first few weeks of its new financial year, continued to be impacted by these shortages and absences. It also said that "significant input cost increases have also dragged profitability down".
The group confirmed that it will continue to focus its efforts on products that are profitable and "pass these unprecedented cost increases" (in sugar, palm oil, energy, packaging and transport) through to its customers, but that there is a lag effect of a few months.
Overall, Real Good Food's third party revenue increased from £37.3m to £40.5m during the year but was still behind the pre-pandemic total of £41.2m.
Its pre-tax losses were cut from £6.1m to £2.8m and its adjusted EBITDA went from £200,000 to £700,000.
North Wales-based Brighter Foods, a food manufacturer specialising in snack bars, was sold to THG during the the financial year for £43m.
The group's two remaining brands are Renshaw and Rainbow Dust Colours.
On its outlook, the group said: "Given the challenging environment in terms of both cost and demand pressures, the board is focused on reducing complexity and waste, other cost saving projects and selective new product launches to make the business as competitive as possible.
"With a significant milestone due in 2023 relating to the repayment of borrowings, the group is focused on improving performance to meet these obligations."
Executive chairman Mike Holt said: "The last few months have been very difficult due to a number of issues relating to costs, supply chain and unavoidable staff absences leading to our performance for the financial year just ended being worse than we had hoped.
"The unprecedented cost increases being experienced by all businesses are being passed through to our customers but there is a timing lag which is impacting profitability.
"The group is determined to hunker down, control costs and protect revenues, and has the support of its loan holders and major shareholders to navigate this difficult time."
