Major Improvement by Bakkavor
Bakkavor, the UK and international fresh prepared foods group, has reported like-for-like revenue growth of 5.4% to £1.72 billion and a 6.9% increase in adjusted EBITDA to £115.1 million for 2012. Revenue from continuing operations was up 1% to £1.59 billion and operating profit was £56.8 million compared to a loss of £2.8 million in 2011. After stripping out the effect of exceptional items, the group’s operating result improved by £8.9 million in 2012, reflecting the improved sales volumes and factory performance efficiencies.
Bakkavor’s UK business generated revenue of £1.41 billion in 2012, almost 88.6% of group sales and a 1.4% increase on 2011. On a like-for-like basis, however, the UK delivered 5.5% growth in the year and 10.2% in the final quarter. This level of growth, which was ahead of the market, was supported by Bakkavor’s capital investment strategy over the past two years and increased spend on innovation.
Adjusted EBITDA rose 4% to £104.2 million with growth almost entirely driven by increased volumes from promotional activity and new business. This was achieved despite a number of adverse factors, including subdued consumer spending and unusually poor weather throughout the spring and summer which impacted the sale of cold eat products.
Agust Gudmundsson, chief executive of Bakkavor.
Bakkavor employs more than 19,000 people globally and produces over 6,000 products in 18 different categories. In the UK, it continues to be the number one producer by value in 13 of the 16 categories of chilled food its supplies. Products include ready meals, pizzas, salads, desserts, soups and sauces. Customers include Tesco, Marks & Spencer, Sainsbury’s, Waitrose, Asda and Morrisons, who sell the group’s products to consumers under their respective retailer brands.
Bakkavor has established a significant presence in international markets with operations in Continental Europe, North America, Asia and South Africa, supplying fresh prepared food products to both retail and food service customers.
Revenue from Bakkavor’s continuing international business segment rose 2% to £181.6 million in 2012, or 11.4% of group revenue. On a like-for-like basis, Bakkavor achieved 8% growth in the year and 7% in the final quarter. This increase was primarily driven by the group’s North American and Asian businesses as these regions continue to build on strong customer relationships. Adjusted EBITDA increased to £6.7 million in 2012, representing a like-for-like increase of 30%. This was achieved despite additional overheads being incurred in the Asian operations as Bakkavor strove to establish market leading standards for technical excellence in the region.
Agust Gudmundsson, chief executive of Bakkavor, comments: “The group made good progress in 2012, particularly in the last quarter which gave the business momentum going into 2013. Although the economic climate remains tough we are confident of our strategy and are well positioned in the chilled convenience market. The worries over contamination in the food chain have understandably impacted consumer confidence. Bakkavor remains absolutely committed to the highest standards of food safety and integrity and we are continuing to work with our customers, suppliers and the authorities on rebuilding consumer trust.”
