Fresh prepared foods producer Bakkavor has seen its UK business outperform the market in its third quarter.

The UK business generated sales of £381.6m – up 3.4% year on year. Kantar Worldpanel data shows the wider fresh prepared food market growing at 2% in the 12 weeks to 13 October.

Agust Gudmundsson, CEO, said the company’s growth remained predominantly volume driven “as the annualised effect of business wins and favourable weather offset the impact of reduced promotional activity and subdued consumer spending.”

Adjusted EBITDA margin improved by 40 basis points, principally due to strict cost controls and the ongoing restructuring of the UK business, Gudmundsson added.

The restructuring included the transfer of the frying business into a new “state-of-the-art” facility, enabling the original site to be closed, and completion of structural reorganisations at several other UK sites.

During the 13 weeks to 27 September 2014, the overall Bakkavor group generated revenue of £422.1m, up from £412.1m a year earlier, with adjusted EBITDA of £32.2m, up 11% from £29m a year ago.

The first phase of the investment in its pizza business, part of a capital investment of £33.5m in the first nine months of the year, was completed in the period and the company is investing in extra baking capacity at its chilled breads facility in response to increased customer demand.

The extra lines, focusing on the artisan bread market, are expected to be operational by the end of this year.

Gudmundsson said: “We continued the group’s positive performance through this latest quarter as we further extended our market share while also improving margins.

He pointed to “unprecedented changes” affecting the UK grocery market with the discounters continuing to gain ground.

“Nonetheless, we remain committed to supporting our customers by significant investment in new technologies and product innovation,” Gudmundsson said.

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