Bakkavor sales rise 3.2% in second quarter

The chilled foods manufacturer reported revenues of £438.7M for the 13 weeks to June 25. The company said international sales rose by almost 20% on the prior year, as it continues to “build foundations for future growth” in the US and Asia.

About 90% of the company’s reported sales came from the UK; a total of £394.8M, representing growth of 2.8% on a like-for-like basis. The increased revenue represents a 0.9% increase in its adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) margin on 2015.

‘Excellent set of results’

Bakkavor ceo Agust Gudmundsson said: “I am pleased to report another excellent set of results for the group, with both strong revenue and EBITDA growth across our businesses.

“We are planning to continue our accelerated capital investment programme to support our ongoing growth with key customers and drive further performance benefits.”

A cash dividend of £36.3M was used to buy the outstanding Bakkavor Group shares that Bakk AL Holdings had not already purchased. Bakk AL Holdings is owned by Bakkavor founders Lydur and Agust Gudmundsson, after they teamed up with one of the world’s largest hedge fund firms to buy out Bakkavor’s Icelandic institutions in January. Therefore, net debt slightly increased on the prior year, despite the positive trading results.

Free cash generation was slightly down in the quarter too. The company said its capital investment programme was to blame for the slight decrease, as its investment offset profitability.

‘Well placed for the future’

The group said the company was “well placed for the future”, despite the economic uncertainty following June’s Brexit vote. It acknowledged Brexit and the introduction of the National Living Wage posed challenges for the sector as a whole.

Agust said: “Although the UK is entering a period of some economic uncertainty following the recent EU referendum, we believe we are well placed to manage the challenges that may lie ahead.”

Meanwhile, the company completed the sale of its Belgian fresh prepared food business Vaco in July. Bakkavor said the deal completed its strategic goal to leave the Continental Europe market, and focus on the growth in the US and Asia.