Bakkavor: trading conditions to ‘remain challenging’

The prepared foods manufacturer said it had made an “encouraging start”​ to the year in both revenue and margin growth. It cited limited market growth, rising labour costs and uncertainty around the upcoming EU referendum as having a challenging impact on the business.

Despite these concerns, it said: “We remain confident that we are well placed to manage these challenges and drive continued improvements across our business.”​

Revenues increased​

The group reported revenues from continuing operations of £415.8M for the 13 weeks to March 26, 2016. On a like-for-like basis, excluding acquisitions, sold and closed businesses and at constant currency, revenues increased by 1.8%.

Reported revenues in its UK business totalled £373.8M in the first quarter, representing growth of 1.6% on a like-for-like basis. This was slightly behind the market, it admitted, but said it had continued to reshape the business and focus on margin.

Efficiency investments​

Adjusted earnings before interest, tax, depreciation and amortisation increased to 7.7%. This was said to reflect ongoing priorities of cost control, productivity and efficiency investments.

It said this approach would remain a key focus going forward as labour costs continued to rise, with further pressure expected following the introduction of the National Living Wage in April.

“As a result of recent business losses at one of our London sites, we incurred restructuring costs of £1.3M in the quarter to protect our ongoing profitability,”​ it said.

Agust Gudmundsson, chief executive officer, said: “I am pleased to report a good start to the group’s 30th year of trading, with both revenue and margin growth. ​

“​We continue to make significant progress in our core markets which gives us the confidence to accelerate our capital investment programme, supporting our customers and driving future growth.”​