Bakkavor profits more than halve amid tough UK trading
Ready meal maker Bakkavor has bemoaned “challenging” UK trading as half-year profits plummeted by more than half.
The group – which supplies the likes of Marks & Spencer, Sainsbury’s and Tesco – reported a 59% plunge in pre-tax profits to £19.5 million for the six months to June 29.
It blamed Brexit uncertainty, rising prices and losses from its now closed meals site in Lincolnshire for a steep drop in UK operating profits, down 28% at £39.8 million.
Bakkavor shut its meals business in Holbeach in April, putting around 680 jobs at risk, although it offered alternative roles to 350 staff.
Despite a tough first half, Bakkavor said its growing international business across the US and China “performed well” and the group was set for a better end to the year.
Shares in the FTSE 250-listed firm rose 6%.
Agust Gudmundsson, chief executive of Bakkavor, said: “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 we remain confident in delivering full-year group performance broadly in line with 2018.”
Bakkavor supplies a host of UK supermarkets also including Waitrose and is said to account for 30% of the UK market for freshly prepared meals, pizzas and desserts.
It is also the UK’s biggest maker of hummus.
The company was founded more than 30 years ago by Agust and Lydur Gudmundsson and floated on the London Stock Exchange in 2017.
Charles Hall, an analyst at Peel Hunt, said: “The stronger second half performance is predicated on a material new business win, easing input cost inflation, cost reductions and improving business performance.”
But he noted the background market “continues to be challenging”.