Glisten starts to see benefits of 'one-stop shop'
half figures reflecting its rapid growth, but highlighted the
increasing cost of integrating its growing number of niche
businesses as it seeks to turn itself into a 'one-stop-shop' for
retailers and manufacturers alike, reports Chris Jones.
The company said that turnover for the six months to 31 December was up 51 per cent to £14.2 million, with new acquisitions Halo Foods and Nimbus contributing £641,000 to the figure. Excluding these acquisitions, sales were up some 10 per cent.
The new additions to the company's portfolio also contributed £37,000 to pre-tax profits of £1.2 million, helping lift the figure by 21.7 per cent.
Since its floatation and decision to form a single confectionery business in 2002, Glisten has grown rapidly. In October 2003 the group bought the Sunya group, a manufacturer of chocolate balls and eggs, while in January 2004 it added F Fravigar, a producer of wine gums and pastilles.
In March 2004, Glisten acquired a range of products and brands names from Penguin confectionery, part of the House of York group, and followed this up with the acquisition of the rest of House of York in July of the same year, giving it ownership of one of the UK's leading toffee producers.
Its latest acquisition, Halo Foods, was completed in December, and pushed the group into the cereal bar business for the first time, while Halo's subsidiary, Nimbus, strengthened Glisten's foothold in the confectionery ingredients sector.
While the group has not ruled out further acquisitions in the second half - it arranged a new credit facility of £17.25 million as part of its acquisition of Halo but is currently using just over £9.4 million of its funds - the period is more likely to be marked by the ongoing efforts to streamline the six different businesses which make up the Glisten empire.
Speaking in September 2004, Glisten's chairman Paul Simmonds explained that the company was aiming to be a single-source supplier of own label confectionery products for its main customers, the UK food retailers, and the first half of the year saw the first moves towards achieving this goal.
The Fravigar business, for example, integrated some new toffee and gum recipes and processes, which led to unexpected downtimes and maintenance costs, while additional costs were incurred by the decision to build the infrastructure at Fravigar's Skegness plant to meet the demands of Gisten's supermarket customers without, to date, a corresponding increase in sales revenues.
The decision to combine the product ranges and sales and marketing activities of Glisten's own facility in Blackburn with Fravigar's Skegness site - to create what Glisten calls "an attractive easing of the buying task" for its customers - is also ongoing with "the benefits of this approach ahead of us", according to the group.
However, Glisten stressed that most of the costs of integration were now behind it, and that sales from the restructured business had got off to an excellent start in the first two months of the second half, suggesting that the real benefits should begin to be felt by the end of its financial year in June.
The Halo acquisition is a slightly different prospect, however, not least because it has taken Glisten into areas of the market where it has not previously been present. The acquisition will more than double the group's sales, and move into a health food market which is showing rapid growth (albeit with a large number of competitor products), but with fewer manufacturing synergies between Halo and the rest of the group, Glisten is focusing on Halo as a largely stand-alone unit, bringing its own commercial experience (and its broad customer base) to bear.
Nimbus, on the other hand, presents more in the way of synergies, with Glisten's own 'inclusions' business already supplying the ice cream sector.
For the second half, the company will be hoping to see real gains from the integration of its earlier acquisitions - already hinted at in the 11 per cent increase in like-for-like sales recorded in the first two months of the year - with the extension of all its myriad product ranges to as many of its core customers as possible.
But the group will also be keen to bolster the still fragile performances of Halo and Nimbus (the former had a torrid time at the start of 2004 as a result of the fallout from Atkins, which hit sales of all cereal products, while the latter broke even for the first time in 2004 and its profit performance remains inconsistent), a project likely to take up much of its time in the coming months.
