Group Overview
The first half of 2010 has seen a difficult trading environment, with both the public and private sectors of the economy facing spending cuts, creating significant margin pressure. Despite this, Brakes Group has continued to deliver growth in sales and has maintained its tight control on working capital. This sales growth has been achieved through our diversified product positioning, broad customer mix and also by acquisition growth.
A key element in the group’s growth strategy is geographic expansion and in April 2010, we expanded in to Sweden through our majority investment in Menigo, a leading Swedish foodservice business with turnover of SEK4.8bn (£430m). Brakes Group now has a strong presence in three distinct geographical locations: UK (inc Ireland), France and Sweden.
Brakes UK
In the current difficult market conditions sales growth has been achieved by working to ensure that we deliver value to our customers and by identifying solutions that help them to address their current needs. Accordingly, we have continued to leverage our market leading own-brand range to offer customers the opportunity to switch to Brakes tiered suite of own brand products. We have also continued to build our range of ‘price saver’ products, offering caterers lower specification alternatives at lower price points. The market has become increasingly competitive and there is pressure on pricing and margins.
We are also continuing to invest in offering new and innovative products and services to enhance our range and provide customers with fresh ideas. We have made significant improvements to our catering equipment range and have also invested in the acquisition of the specialist catering butcher, Browns.
Brake France
The French economy has faced many similar challenges to the UK market, with some slow down in consumer spending. However Brake France has a smaller market share in France than Brakes in the UK and the opportunities to deliver growth through market share gains, product expansion and share of wallet are significant. During the first half of 2010, we conducted a strategic review of our operations in France that re-affirmed our intention to build on the strong regional proposition, which we believe will create a platform for sustained and profitable growth in the French market.
Menigo (Sweden)
We are delighted to have added Menigo in Sweden to the Brakes Group of companies. Although we are still at an early stage of the integration programme, we are excited by the growth opportunities that we believe this acquisition offers through the sharing of distribution practises, purchasing and customer leverage between the UK and Sweden.
Strategy update
Brakes Group continues to be focused on identifying opportunities to deliver sustainable long term growth in sales and profit. We continue to seek out profitable opportunities to consolidate our markets, whether from category enhancements, geographic in-fills or geographic expansions.
Corporate, social and environmental responsibility
We remain committed to ensuring that our business grows and develops in an environmentally sustainable and sociably responsible manner. To this end, we continue to monitor our business activities under five pillars: Our People, Health and Nutrition, Responsible Sourcing, the Environment and Community. These five elements are essential to the success of our business and have a role in how we achieve our sales growth or deliver profits. For example, the recently launched Pasta Pronto concept that provides a complete healthy meal solution for schools demonstrates not only our commitment to health and nutrition, but also our continuous drive for product innovation to support sales growth. With regard to the Environment, Brakes UK again passed its annual ISO 14001 surveillance audit and received impressive feedback from its assessors for its carbon management and reduction strategies. Our carbon reduction strategies have not only had benefits towards our environmental commitments but have also shown benefits in our cost reduction programmes.
Conclusion
In view of the challenging economic conditions across Europe, we are pleased with the resilience that the business has shown in the first half of 2010. There continues to be pressure on the economy, low consumer confidence and an increasingly competitive trading environment. Brakes Group accordingly continues to focus on the measures and steps it can take to protect its performance in such an environment, but is also prepared to consider opportunities and invest in activities that will help position the business for growth.
