Food group Bakkavor has increased revenues 3.2% to £438.7m in the second quarter as it grew business with the supermarkets in the UK and the overseas business continued to soar thanks to the push in the US.
Like-for-like growth in the three months to 25 June rose 3.6%, with first half sales up 2.3% to £854.5m.
Adjusted EBITDA was also up 18% to €41.4m, reflecting an increase in volumes and cost control and productivity improvements.
CEO Agust Gudmundsson said: “I am pleased to report another excellent set of results for the group. 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.”
Second quarter sales in the UK climbed 1.8% to £394.8m – 2.6% on a like-for-like basis – with adjusted EBITDA up 12% to £38.3m.
Bakkavor said it grew revenues with all four key customers over the period and saw strong performances across all our core categories. The rise in EBITDA was driven by higher volumes and cost controls.
“This improvement in profitability is encouraging, especially given the ongoing pressure on labour costs, exacerbated by the introduction of the national living wage in April,” the group added.
Internationally, revenues jumped 17.7% to £43.9m in the quarter, with good performance in the US and Asia. On a like-for-like basis, which excludes currency movements, revenue growth was 11.9% and adjusted EBITDA was up 288% year on year to £3.1m.
Since the end of the quarter, Bakkavor completed the sale of its Belgian fresh prepared food business to Culinor Food Group. It signals the end of the long-term goal to exit from the low margin Continental European market and focus the significant in the US and Asia.
Bakkavor said the results in the first half were “excellent” but was cautious on the challenges facing the sector.
“The uncertainty following the recent EU referendum, together with the ongoing cost implications of the national living wage and likely volatility in input pricing will undoubtedly pose challenges for the sector as a whole,” the group added. “However, we believe we are well placed for the future with a clear commitment to drive innovation and investment across our businesses.”
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