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Bakkavor annual profit lower as inflation persists

19th Jan 2023 12:13

(Alliance News) - Bakkavor Group PLC shares fell on Thursday, as 2022 profit took a hit from inflationary pressures and Covid-19 measures impacting volumes in China.

Bakkavor is a London-based food manufacturing firm, it will join London's FTSE 250 index on Monday.

Bakkavor shares were down 2.9% at 105.80 pence each in London on Thursday around midday. It hit a low of 100.20p on Thursday morning.

The company expects to report revenue of GBP2.14 billion for the 53 weeks to December 31, up 14% from GBP1.87 billion in 2021. This is the first time annual revenue has exceeded the GBP2 billion revenue mark, it noted.

Bakkavor explained that the increase was primarily driven by prices in the UK with strong volume growth in the US. However, Covid-19 measures hurt volumes in China.

In the UK revenue jumped 12% to GBP1.78 billion from GBP1.59 billion year-on-year. In the US, it climbed 42% to GBP255.3 million from GBP180.1 million. In China, revenue increased by just 1.7% to GBP100.8 million from GBP99.1 million.

The company noted that full-year adjusted operating profit remains in line with market expectations of GBP88.6 million. In 2021, Bakkavor reported an adjusted operating profit of GBP102.0 million.

The company noted: "Whilst we have been successful in largely mitigating inflation through pricing and internal levers, there has been some impact on profits, which are down year-on-year."

Looking ahead, Bakkavor said it has implemented a company-wide plan to protect profits, as it expects headwinds to persist into its markets through 2023. In noted that its plan, which includes "includes a leaner organisation structure, refreshed clear and focused regional priorities, and enhanced emphasis on managing cash", will deliver savings of GBP15 million in financial year 2023.

The cost of implementing the plan are expected to be around GBP20 million, with most of the cash outflow in financial year 2023.

Chief Executive Mike Edwards said: "Whilst market challenges will persist in 2023, the actions we are taking to protect profits, our clear strategy and our balance sheet strength, allow us to move forward with purpose and confidence, enabling us to deliver on our medium- to long-term ambitions."

By Sophie Rose, Alliance News reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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