2nd Apr 2020 09:18
(Alliance News) - Fresh food specialists Bakkavor Group PLC on Thursday pulled its final dividend and said it will furlough staff as the Covid-19 pandemic has battered sales.
Bakkavor said the early part of its financial year, which began on December 29, had been "encouraging". Since then, the virus outbreak created "significant operational challenges", first in China, and then in the UK and US.
Bakkavor explained: "The impact of this has led to increased volatility in daily order levels, and some disruption to labour availability. While our colleagues and infrastructure have responded well in ensuring excellent service levels for customers, trading has been impacted and overall sales are below expectations."
In the UK, where Bakkavor generates 90% of its adjusted earnings before interest, tax, depreciation and amortisation, the virus crisis has hit all of its divisions, with salads and food-to-go products suffering particularly. In the US, orders also have fallen, but in China they have stabilised.
Bakkavor said it has frozen all non-essential capital expenditure in a bid to control costs. Among its cost savings is the withdrawal of its final dividend.
Bakkavor said "We are reviewing capacity across our facilities to better match the current levels of demand and, wherever possible, we will be supporting any impacted colleagues by making use of the job retention scheme (furlough) introduced by the government in the UK."
Its chair and some non-executive directors have agreed to a 50% pay cut while Chief Executive Officer Agust Gudmundsson and Non-Executive Director Lydur Gudmundsson, the company's founders, have volunteered not to take a salary.
Bakkavor has also delayed the publication of its annual results, initially penned for May 21. It said it will announce a new date shortly.
Bakkavor shares were 8.9% lower at 89.84 pence each in London on Thursday morning.
By Eric Cunha; [email protected]
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