Bakkavor meals

Revenues have nudged up 1.4% at Bakkavor to £415.8m in the first quarter of 2016 despite the deflationary markets as the food manufacturer manged to shift more volume.

Like-for-like sales also rose 1.8% in the 13 weeks to 26 March and adjusted EBITDA climbed 23% to £30.5m as the group improved margins.

The UK business increased like-for-like sales 1.6% to £373.8m in the period as Bakkavor continued to reshape its business and focus on margin.

Underlying growth across the core categories was “good”, driven by a pipeline of new product launches and joint business plans with customers, Bakkavor said.

International sales rose 11% to £42m – up 4% on a like-for-like basis – reflecting favourable currency movements and the benefits of a full quarter of ownership of US manufacturer B. Robert’s Foods, which it acquired in January 2015.

CEO Agust Gudmundsson said: “I am pleased to report a good start to the group’s 30th year of trading, with both revenue and margin growth. We continue to make significant progress in our core markets which gives us the confidence to accelerate our capital investment programme, supporting our customers and driving future growth.”

The Gudmundsson brothers retook control of Bakkavor earlier this year in a deal with US hedge fund The Baupost Group to buy out the business’ Icelandic banking shareholders.

It was followed in April by a credit rating upgrade from Standard & Poor’s to B+ in recognition of improving trading, earnings and cashflow.

“The group has made an encouraging start to the year with both revenue and margin growth,” Bakkavor said in the first quarter report. “As we look ahead over the coming months we expect trading conditions to remain challenging with limited market growth, rising labour costs and uncertainty around the upcoming European Union referendum.

“However, we remain confident that we are well placed to manage these challenges and drive continued improvements across our business.”