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Summary
- Hotel Chocolat Group reported revenue of £136 million, which was increased by 3 percent year on year.
- The Company had reported strong performance through digital channels.
- Finsbury Food Group generated revenue of £306.3 million in FY2020, which fell by 2.8 percent year on year.
- The Company had a resilient performance in the first half of the financial year. In contrast, the business activity was impacted in the second half due to the closedown of outside eating and food services business.
Hotel Chocolat Group PLC (LON:HOTC) and Finsbury Food Group (LON:FIF) are FTSE listed food & beverage stocks. Shares of HOTC and FIF were up by close to 1.11 percent and 0.42 percent from their last closing price (as on 23 September 2020, before the market close at 12:50 PM GMT+1).
Hotel Chocolat Group PLC (LON:HOTC) - Investing in increasing manufacturing capacity
Hotel Chocolat Group PLC is a UK based chocolate company. The Company sells chocolates, Easter eggs, liquor chocolate and chocolate related gifts. It operates cafes, restaurants, hotels and chocolate shops.
Trading update for FY2020 (ended 28 June 2020) as reported on 24 July 2020
(Source: Company website)
Hotel Chocolat Group reported revenue of £136 million in FY20, which increased by 3 percent year on year. The Company generated revenue of £92 million in H1 FY20, which increased by 14 percent year on year. In contrast, the revenue stood at £45 million in H2 FY20, which fell by 14 percent year on year. The re-handling of inventory and pandemic related costs in the second half of the year lowered the gross margin.
The Company expects the pre-tax profit to be in line with the management's expectation, and it highlighted that it might have a higher impairment charge compared to the previous charges related to fixed assets. As on 28 June 2020, Hotel Chocolat Group had a liquidity headroom of £60 million and cash of £25 million. The Company raised £22 million in March 2020, which it is investing in increasing the manufacturing capacity and upgrading the digital platforms.
The manufacturing facility in Cambridgeshire was closed for eight weeks but it re-opened in May 2020. All the stores run by the Company were closed for 12 weeks from 22 March until 15 June 2020. Easter and Mother's Day fell between this time period, which is considered to be a big gifting season. The Company was able to make up for some portion of the revenue lost by selling products online. The Company handled its supply chain and distribution centres very diligently during the pandemic to continue uninterrupted online sales. The digital sales skyrocketed by almost 200 percent in the fourth quarter of FY20 as it continues to generate gifting and subscription-based sales.
Growth proposition for Hotel Chocolat Group
(Source: Company website)
Share Price Performance Analysis
1-Year Chart as on September-23-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Hotel Chocolat Group PLC's shares were trading at GBX 364.00 and were up by close to 1.11 percent against the previous closing price (as on 23 September 2020, before the market close at 12:50 PM GMT+1). HOTC's 52-week High and Low were GBX 527.00 and GBX 190.00, respectively. Hotel Chocolat Group had a market capitalization of around £451.80 million.
Business Outlook
The Company re-opened the majority of its stores at the time of reporting, and it stated that the performance of the high street stores has been better as compared to city-centre stores. The performance of sales through digital platforms is doing well, and it will continue to perform in a similar manner.
The performance of the physical stores remain subdued, and a similar pattern has been observed in the US and Japan, where Hotel Chocolat Group operates in the joint venture. The Company is cautious over the outlook of the business amid the current volatility in the market. Meanwhile, the Company is expected to double the supply-chain capacity by more than 100 percent in FY21 following the expansion of the distribution centre in Cambridgeshire.
Finsbury Food Group (LON:FIF) - Business activity improved in the first two months of FY2021
Finsbury Food Group is a UK based company that is engaged in speciality food services. The Company manufactures cakes, bread, snacks products and other bakery items. Kara is the self-owned food service brand, and its licensed brands include Thornton, Weight Watchers and Vogels.
(Source: Company website)
FY2020 results (ended 27 June 2020) as reported on 21 September 2020
Finsbury Food Group reported revenue of £306.3 million in FY20, which fell by 2.8 percent year on year from £315.3 million a year ago. The adjusted EBITDA declined by 4.4 percent year on year to £24.4 million in FY20. The adjusted operating profit stood at £14.8 million in FY20 that was down by 11.9 percent year on year. The adjusted earnings per share were 7.9 pence, which was down by 15.1 percent year on year in FY20. Finsbury made a capital investment of £4.7 million in FY20 and the net debt was £26.5 million as on 27 June 2020, and it did not use any of the covid-19 related government schemes.
In FY20, the UK Bakery business division contributed £271.4 million, and Overseas division added £34.9 million to the total group sales. The management withdrew the interim dividend of 1.23 pence per share in March 2020, and it did not propose the final dividend for FY20. The management may consider reinstating the dividend in FY21.
The Company had a resilient performance in the first half of the financial year; however, its performance was impacted by the lockdown in the second half of the financial year. The Company generates approximately 20 percent of the revenue from the food service and out of home eating, and as the economy was closed from 23 March 2020, it heavily impacted the sales. The sales improved slightly as in June 2020 it was down by 15 percent than 24 percent in April 2020 as compared to the same period last year.
Operating Principles of Finsbury Food Group
(Source: Company website)
Share Price Performance Analysis
1-Year Chart as on September-23-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Finsbury Food Group PLC's shares were trading at GBX 57.14 and were up by close to 0.42 percent against the previous closing price (as on 23 September 2020, before the market close at 12:50 PM GMT+1). FIF's 52-week High and Low were GBX 105.00 and GBX 50.00, respectively. Finsbury Food Group had a market capitalization of around £74.19 million.
Business Outlook
The Company’s performance was impacted due to the nature of its business as the outside eating was closed. The trading activity has improved month on month in the first two months of FY21. The food service business is dependent on government rules and policies, and so is the Company's performance. The uncertainty remains over bounceback of the demand and changing demand pattern. The Company highlighted that it is financially and operationally equipped to sustain the pandemic.
