FDBusiness.com

Bakkavor Group, the leading provider of fresh prepared food in the UK with a growing international presence in the US and China, has reported a sharp fall in operating profit to £29.3 million for the 26-week period ended 29 June 2019, compared to £54.1 million in the prior period. Group revenue was up 1.4% at £923.0 million, with like-for-like revenue up 2.0%, in the first half of 2019.

Group adjusted EBITDA pre IFRS 16 for the first half of 2019 was £73.5 million, down 6.5% with a margin of 8.0%, impacted by lower volumes and the losses recorded prior to closure of a UK meals site in April 2019. In addition to the lower trading performance, £8.3 million of ongoing start-up losses for new sites was incurred and also exceptional items increased by £9.9 million to £13.1 million due to disruption and restructuring costs.

Whilst trading in the UK remained challenging, especially against a tough comparative, the International business performed well. As expected, trading this year in the UK will be weighted towards the second half as new business comes on stream and raw material pricing eases.

Agust Gudmundsson, chief executive of Bakkavor Group, says: “During a challenging period, I’m pleased by the resilience we’ve shown across the business to deliver a solid first half performance. While the trading environment in the UK is still uncertain, we remain positive of our long-term prospects and the demand for fresh prepared food. Our UK operations have never been stronger and we’re the clear market leader across all four of our core categories. I’m encouraged by developments made across our US business; improving efficiencies, streamlining our customer proposition and building sales across new sites. Our business in China continues to go from strength to strength, expanding both our customer base and product offering.”

He continues: “Despite a subdued start to the second half, we currently expect an uplift in performance, boosted in the UK by the impact of new business and an easing of raw material inflation. Our International business is making further progress and therefore the Group remains confident in delivering full-year performance broadly in line with 2018. Looking further ahead, we believe that our strategy, combined with our scale and expertise, leaves us well placed to capitalise on future growth opportunities.”

Bakkavor Group is the number one by market share in the UK in the four FPF product categories of meals, salads, desserts and pizza & bread. Its customers include some of the UK’s leading grocery retailers, including Tesco, Marks & Spencer, Sainsbury’s and Waitrose. Bakkavor was founded in 1986 and has its headquarters in London. The group has over 19,000 employees and operates 25 factories in the UK, five in the US and nine in China.