Top story
Ready meals giant Bakkavor has posted a rise in revenues and profits in its first six months as a listed business and announced the £12m acquisition of sweet bakery products supplier Haydens Bakery from Real Good Food.
Established in 1976, Haydens is a leading manufacturer of sweet bakery products for the major UK grocery retailers and provides a distribution operation for one of the UK’s leading retailers.
The business operates from two sites in Devizes, Wiltshire, and has 480 employees.
The total cost of the deal is £12m, subject to adjustment in relation to levels of working capital and net debt.
Bakkavor said the deal increases the breadth and depth of its desserts range, extending our offering in in-store bakery, while supporting growth in its desserts business as it is integrated into its existing business.
CEO Agust Gudmundsson said: “Haydens is a business which shares Bakkavor’s passion for providing outstanding service, quality and value to its customers and has a reputation for supplying some of the best tasting sweet treats to the UK’s leading retailers. This acquisition will grow both our capacity and product offering in the desserts category, and we are delighted to be welcoming Haydens’ management and the wider team to our business.”
The acquisition comes as Bakkavor announced that group revenues increased by 0.8% to £910.4m in the six months to 30 June £910.4m, representing like-for-like growth of 2.8%.
International growth accelerated in particular, with revenue up 15.4% on a like-for-like basis.
UK revenues fell by £0.3m to £816.6m, which represented like for like growth of 1.4% excluding the Melrow Salads business that was closed in November 2017 and the Anglia Crown business which was sold in July 2018
Bakkavor said that after a relatively slow start to the year, volumes started to increase from April as expected. There has also been some benefit from pricing in this period, given the inflationary environment which began in the latter part of 2016, with recovery in line with historical levels.
The group posted adjusted EBITDA up 1.2% to £78.6m, and margins held at 8.6% in an inflationary environment as investments in operational efficiencies partly offset rising labour costs.
Operating profit decreased by £0.5 million, or 0.9%, from £54.6m to £54.1m in the period with margins decreasing by 10 basis points to 5.9%. This decrease was due to the improvement in trading performance being offset by an increase in depreciation following the completion of a number of capital projects across the business.
Gudmundsson commented: “We have delivered a positive performance in the first half as we continue to focus on the drivers of long term sustainable growth: leveraging our number one position in the UK fresh prepared food market, accelerating growth in high potential international markets and further improving our operational efficiency.
“Looking ahead, we continue to remain cautious and anticipate little change in underlying economic and market trends. In particular, input price volatility continues which may in turn impact consumer demand going forward. Despite these pressures, our scale, passion for food and close partnerships with our customers leave us well placed and our expectations for the full year remain unchanged.”
Morning update
Private label household goods manufacturer McBride (MCB) has announced a 9% rise in full-year sales as currencies and the acquisition of Danlind boosted its performance.
Revenues in the year to 30 June were 9% higher at £689.8m, with Danlind adding £48.4m for the nine months following acquisition.
On an underlying basis, full year sales were lower by £5.1m, down 0.8%. Following an overall decline in the first half of 4.3%, second half underlying revenues were ahead by 2.9% with Household underlying revenues up 3.8%.
Full year underlying Household sales were higher by 0.1% and PCA lower by 7.0%.
In Household the increase was primarily as a result of the start-up of deliveries in the second half from contract wins in Germany that resulted from competitor weakness, and UK growth following a number of contract wins.
The PCA segment, which now comprises Aerosols and Asia, saw the Aerosols business continue to experience an extremely competitive environment in both the UK and France, with volumes declining year on year by 11.7% after a first half year decline of 12.1%.
Customer price pressure remained a feature during the year, the group said, resulting in group-wide prices that were essentially flat overall.
Adjusted operating profit of £37.7m was £4.3m lower that the prior year after absorbing raw material and transport cost inflation
Across the full year to June 2018, raw material prices increased by approximately 2.2% compared to the prior year, with 0.4% of this was driven by foreign exchange, mostly from the impact of the weak sterling.
Operating profits fell from £40.3m to £31.8m after adjusting items of £5.9m, mostly exceptional costs of £4.5m from the reorganisation in Aerosols and Danlind acquisition costs, and amortisation of £1.4m
CEO Rik De Vos commented: “Whilst our trading performance in the year ended slightly behind our early expectations, we have continued to outperform our sector both financially and operationally in what has been a particularly challenging environment. Against this backdrop I am pleased that our teams have made such excellent progress in the execution of our strategy. We achieved good growth in our key categories and geographies, the integration of Danlind is progressing well, and the exit from a major part of our PCA business in Europe allows us to focus fully on our core activities in European Household.
“In the current year we remain focused on the profitable delivery of our anticipated volume growth whilst continuing to take actions to mitigate strong input cost inflation, including commercial price recovery from our customers. We will also maintain close control of overheads whilst investing in key focus areas that will enable McBride to fully exploit its scale and cost advantage within its supply chain.
“Revenues in the first few months of the new financial year have been satisfactory and whilst certain cost pressures persist, at this stage the Board remains confident the Group will achieve its full year expectations.”
On the markets this morning, Bakkavor is up 0.9% to 179.1p - still below its 180p float price of last November. McBride shares are up 1.1% to 131.8p this morning.
The FTSE 100 is flat at 7,378pts so far this morning.
Early movers include Nichols (NICL), up 1.9% to 1,485p and Devro (DVO), up 1.1% to 194.1p.
Fallers so far include Real Good Food (RGD) after the Haydens sale, down 3.7% to 6.5p, Greggs (GRG), down 2.7% to 1,025p, Just Eat (JE), down 2.6% to 719.6p and Hilton Food Group (HFG), down 1.5% to 938p.
Yesterday in the City
The FTSE 100 slumped another 1% back to 7,383.3pts continuing its poor recent run to hit a four-month low amid continuing worries over global trade and the strengthening of the pound.
There were some heavy fallers amongst the grocery sector’s biggest listed names, led by European Coke bottler Coca-Cola HBC, which dropped 3.7% to 2,562p and Ocado (OCDO), which fell 2.8% to 1,041.5p.
Other FTSE 100 names on the slide included Unilever (ULVR), down 1.7% to 4,283p, Tesco (TSCO), down 1.3% to 240.3p, Compass Group (CPG), down 1.3% to 1,649.5p, Diageo (DGE), down 1.3% to 2,685.5p and Imperial Brands (IMB), down 1.2% to 2,692p.
More industry fallers included PZ Cussons (PZC), down 2.5% to 231.2p, PureCircle (PURE), down 8.3% to 298p, Kerry Group (KYGA), down 3.1% to €96.25, Just Eat (JE), down 1.9% to 738.8p and PayPoint (PAY), down 1.9% to 913p.
Leading the day’s few risers was Associated British Foods (ABF), up 1.8% to 2,284p.
Other climbers included Hilton Food Group (HFG), up 1.5% to 952p, Premier Foods (PFD), up 1.5% to 41.9p, Gregg’s (GRG), up 1.2% to 1,054p and C&C Group (CCR), up 1% to €3.44.
No comments yet