Bakkavor has suffered a 1% drop in fourth-quarter profits despite reporting strong sales growth.
The own-label manufacturer said adjusted EBITDA fell to £27.4m in the quarter ending 28 December, although over the full-year profits rose 1% to £111.6m.
Meanwhile, turnover continued to grow strongly, increasing 4% to £416.3m in the final quarter. Over the full year, it was up 4% to £1,649.8m.
Bakkavor said sales were boosted by “a number of new business wins” including in its pizza and salads operations.
However, it said margins were affected by raw material cost inflation, particularly in the second half of the year.
“Poor weather earlier in the year, combined with greater emphasis on local sourcing, particularly affected prices for dairy, flour, produce and meats,” it said in a statement.
After refinancing in 2013 and improving cash generation, Bakkavor was able to reduce its net debt by £44m.
During the year, Bakkavor sold its French, Spanish and Czech businesses and its loss-making Canadian facility, as part of a strategy to focus on its main UK business and grow markets in the US and Asia.
“The group made excellent progress delivering on our key strategic objectives in 2013,” said Bakkavor CEO Agust Gudmundsson. ”We completed a successful refinancing, exited a number of overseas operations and restructured certain low margin businesses. This was achieved whilst still growing our revenues ahead of the market, protecting our margin from significant raw material inflation and delivering double digit growth in free cash generation.”