The outbreak of COVID-19 has led to increased disruption to labour availability for the manufacturer and volatility in daily order levels in the UK, with its salads and food-to-go products the worst affected.
Bakkavor hasn’t ruled out the possibility of furloughing staff as it assesses its level of demand during the pandemic.
The uncertain financial outcome surrounding the outbreak of COVID-19 has led to all non-essential capital investment and discretionary expenditure being placed on hold. The company board has also decided to suspend its proposed final dividend in addition to its proactive steps around cash and investment.
In a statement, Bakkavor said: “While uncertainty related to COVID-19 remains, we will continue to prioritise our employees in their roles as key workers and support our customers in every way we can to ensure the continued supply of fresh prepared food.
Long-term growth predicted
“Looking further ahead, we remain confident that the strength of our business and strategy leaves us well positioned to achieve long-term sustainable growth within the attractive fresh prepared foods sector.”
Members of the board and management board have also agreed voluntary reductions in remuneration for the coming three months, with the chairman and non-executive directors to take a 50% reduction in base salaries and fees.
The group’s founders – chief executive Agust Gudmundsson and non-executive director Lydur Gudmundsson – have volunteered not to take a salary in the period. The wider management board have also agreed to a voluntary 20% reduction in base salaries.
The statement added: “Bakkavor is a resilient and cash-generative business with a robust balance sheet, which has market-leading positions in each of the categories in which it operates; we are responding to the impact of COVID-19 from a position of strength.”
Refinancing deal
Bakkavor’s coronavirus outlook followed a £455m refinancing of its bank facilities last month, as it continued to push for greater sustainability within the business.
According the manufacturer, the margin on the facilities was linked to two of the group’s corporate responsibility targets: its performance against food waste reduction and greenhouse gas emission targets.
Meanwhile, vertically integrated retailer Morrisons has posted continued growth despite the backdrop of a global pandemic, with profit over £400m in the year ended 2 February 2020.
The recent wave of stockpiling by consumers has directly benefited Morrisons, which has already reported a like-for-like sales boost of 5% for the first weeks of the 2020/2021 financial year. This was despite a significant deflationary impact of its continued investment in becoming more competitive.
