By Dhirendra Tripathi
Investing.com – Greggs PLC (LON:GRG) stock slumped 8.3% in London trading Tuesday after it flagged significant cost pressures in its bakery business, saying it does not expect “material profit progression” in the year ahead.
CEO Roger Whiteside told Reuters, Greggs was having to deal with raw material price increases "right across the board, all food stuffs."
“All the proteins, all the cereals, all the oils - everything's going up in price," Whiteside told the news agency.
Some 29% of Greggs' total costs are in food ingredients, labor being its biggest cost.
The ongoing Russia-Ukraine conflict has sent prices of food grains and other farm-based commodities to multi-year highs. Crude prices are at their highest since 2008. Supply chains, which began to return to normalcy after the pandemic, are in turmoil again.
The price of wheat rocketed past $10 a bushel last week for the first time in more than a decade, according to Bloomberg. Corn also leaped to a nine-year high and soybean oil traded near record highs.
Russia and Ukraine account for about a quarter of global wheat and barley trade and a fifth of corn. Farming activity in Ukraine is in disarray as many farmers have rushed to perform military roles.
Whiteside said Greggs had raised prices for consumers at the beginning of 2022, but not since then.
In the year ended January 1, Greggs’ total sales rose 5.3% to 1.23 billion pounds. Pre-tax profit was near 146 million pounds compared to a loss last time.