Bakkavor shares fell sharply this week after the prepared foods group warned annual profits would be at the lower end of forecasts, due to consumers tightening their belts amid the squeeze on spending power.

While sales volumes had held up through the summer, they had taken a downward turn in September as soaring energy bills and food prices put household budgets under increasing pressure, the own label supplier admitted on Wednesday.

Price hikes helped Bakkavor grow revenues by a seemingly strong 15.3% to £542.5m in the 13 weeks to 25 September, with like-for-like sales up 12.7% to £530.5m. UK like-for-like sales rose 11.9% to £445.3m in the third quarter, while sustained demand and further price increases helped the US business grow revenues 46.3% to £67.5m – a 26.3% like-for-like jump.

However, Bakkavor warned adjusted operating profits for the year would now come in at the lower end of its forecast range, as a result of volume pressure in the UK and a reduction of volumes in the US, where it is in a contractual dispute with a customer.

Meanwhile, input cost pressures continue to intensify, with the company now expecting full-year inflation to be around 14%.

Bakkavor flagged steps it had taken to protect long-term profits, including the proposed closure of two UK factories, a leaner organisation structure with a new management board, and an enhanced focus on managing cash.

The moves would deliver expected savings of £15m in the 2023 financial year and £25m on an annualised basis, it said. However, it will cost Bakkavor £20m to implement the plans, taken as an exceptional cost in the current financial year.

Bakkavor shares fell 5.8% to 88.9p on Wednesday and have lost more than 30% of their value so far in 2022.

Peel Hunt said Bakkavor’s performance was “as expected”. However, it reduced earnings expectations for the current and next financial year due to “the impact of softer volumes, input cost inflation and operational challenges in the US”.

The news comes in the same week Unite suspended a planned strike by more than 700 workers at Bakkavor’s Spalding factory following a revised pay offer