Nelson-based specialist bakery hotplate manufacturer Sugden’s have won a multi-million pound contract with a German bakery with support from the UK government.
Sugden is a world-leading designer and manufacturer of specialist hotplate equipment for the production of English muffins and crumpets.
With big-name customers such as Warburtons, Sugden’s have benefited from a rapidly rising demand for iconic British baked goods around the world. This has seen the companies exports increase, which now account for 70 per cent of sales in 2016/17. Their turnover has also tripled to £6.5m.
Sugden hopes to build on this momentum and expand exports into emerging markets in Central and Eastern Asia in the near future.
The large contract that Sugden won last year with a major German bakery for the sale of its top-selling English muffin production line was a complex one. Under the terms of the contract, the buyer provided an upfront payment to help Sugden finance production of the order. The buyer requested an advance payment guarantee in return – an assurance that Sugden would uphold its side of the deal.
However, as banks typically request a cash deposit in order to issue these guarantees, this would have tied up essential working capital and caused cash flow difficulties for Sugden.
UK Export Finance (UKEF) stepped in to help. UKEF is the UK’s export credit agency and part of the Department for International Trade, providing financial support and guidance to help companies take on, fulfil and get paid for export contracts.
UKEF worked with Sugden’s bank RBS and provided an 80 per cent guarantee under its Bond Support Scheme.
That meant the company could secure the advance payment guarantee from RBS with a significantly reduced deposit and hold onto sufficient cash to fulfil the contract.
Chris Baldwin, Managing Director of Sugden, said: “Without UKEF’s intervention this deal wouldn’t have happened.
“Our relationship with UKEF has been crucial to the success we’ve seen in overseas markets and helping us to maintain excellent relationships with our international customers.”
Steve Cowles, Export Finance Manager for the North West, said: “I’m proud that UKEF was able to support Sugden on this important contract and this is a great example of how UKEF is working with banks to provide dedicated export finance to help more UK companies benefit from the opportunities that selling overseas can offer.”