Bakkavor shares fell today after the prepared foods supplier warned further price hikes could hurt its volumes as the group continues to recover from the pandemic.
Revenues in the first quarter to 26 March increased 11.5% to £485.4m with growth of 8.7% in the UK to £407.4m, 40.9% in the US to £55.1m and 5.5% in China to £22.9m.
Bakkavor said strong sales momentum in the US was driven by continued volume growth with strategic customers, particularly in fresh meals, while price increases and good volumes helped lift the UK business when compared with a year ago in a period subdued by lockdowns.
Shares were down more than 4% in early trading before recovering to close flat at 100p.
“Whilst inflationary headwinds have intensified in the period, successful price recovery, strict focus on cost control and continued efficiency improvements have helped to offset the impact,” Bakkavor added.
“Our UK business remains in a strong position, and our scale, category leadership and strong customer relationships underpin the resilience of our business model.”
The group said it was working with its customers to mitigate the impact of ongoing inflationary headwinds, while also maintaining strict cost control and enhancing productivity.
In the UK, it warned, further price increases in the market could have some impact on volumes, but its category breadth and strong pipeline of innovation left the business “well placed” to underpin growth.
CEO Agust Gudmundsson said the group had seen a “positive” start to the year as Bakkavor confirmed it expected annual results to be in line with forecasts.
“We expect the trading environment to remain challenging and for input costs to continue to escalate,” Gudmundsson added.
“However, we remain well placed to navigate the ongoing headwinds as our price recovery to date, combined with our continued drive for efficiency improvements and disciplined approach to cost control will help to mitigate the impact.
“Despite further recent increasing pressure on household budgets, we are highly focused on driving volumes across our categories and further strengthening our customer relationships by bringing innovation to our product ranges.
“We remain confident in our medium-term growth opportunity, both in the UK and internationally.”
No comments yet