Bakkavor facility

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Bakkavor Group has continued its recovery from pandemic disruption, reporting strong revenue momentum in the first half despite inflationary challenges.

Revenues increased 10.3% to £1bn in the 26 weeks to 25 June, with a like-for-like rise of 9.2%.

In the UK, price hikes helped revenues grow by 7.9% year on year and Bakkavor said its volume growth had outperformed the fresh prepared food market.

Strong demand in the US pushed up like-for-like sales 34.6% but delays in pushing through price increases held back margin, while in China the group continued to be hit by ongoing Covid restrictions.

Despite overall sales growth in the half, operating profits slumped 12.5% to £41.1m as a result of the issues in the US and China, with pricing action and efficiencies protecting profitability in the UK.

CEO Agust Gudmundsson called the first-half “strong” and said it demonstrated “continuing resilience”, underpinned by the strength of its customer partnerships, supply chain management, scale and category leadership.

“We remain confident in our ability to deliver a full-year performance in line with the range of market expectations as we continue to focus on managing costs, price recovery, and driving demand in our categories,” he added. “The current geo-political uncertainty, however, will result in significant levels of inflation and consumer spending headwinds persisting through 2023.”

Bakkavor increased its interim dividend 5% to 2.8p per share.

Shares in the group opened 0.8% lower this morning at 89.3p.

Morning update

Sales at WH Smith have “comfortably” surpassed pre-Covid levels in the second half as the travel industry bounced back from the pandemic.

A pre-close trading update for the year ended 31 August showed that total group revenues in the second half stood 12% higher than in 2019 as performance improved throughout the year. The total compared with sales still being 16% below 2019 levels at the end of the first half.

The group’s travel estate of stores in airports and railway stations showed steady improvement in the year, moving from 18% below 2019 figures in the first half to 23% higher in Q3 and 35% in Q4.

In the UK, the travel division pushed sales 8% higher than 2019 levels in the second half, while in North America sales grew 13% and by 3% in the rest of the world.

However, the high street division continued to lag behind pre-pandemic performance, with second-half sales still being 20% below where they were in 2019, which was even worse than the 14% shortfall in the first half.

WH Smith blamed the disruption caused by the cyber attack at its online Funky Pigeon greeting cards business for the decline.

The group said the high street business was performing in line with expectations and it had identified further “significant cost-saving opportunities”, mostly through rent reductions.

WH Smith added the group expected the outcome for the year to 31 August 2022 to be in line with the upgraded expectations released back in June during the third-quarter update.

Shares in the retailer plunged 2.8% to 1,437p as markets opened this morning.

The FTSE 100 slumped 1.4% to 7,198.90pts this morning following US and Asian markets down.

Early fallers in food and drink alonsgide WH Smith included Deliveroo, down 4.2% to 80.1p, Coca-Cola HBC, down 3% to 1,892p, Science in Sport, down 1.8% to 28p, and Fever-Tree Drinks, down 1.6% to 856.5p.

Risers included Nichols, up 4.7% to 1,146.6p, PayPoint, up 2.3% to 630p, McBride, up 2.2% to 23.4p, Hilton Food Group, up 1.7% to 975p, and Devro, up 1.1% to 185p.

Yesterday in the City

The FTSE 100 managed to stay in the black yesterday as Liz Truss officially became UK Prime Minister, with the blue-chip index rising 0.4% to 7,319.37pts.

Retail stocks were buoyed by the expectations of a £100bn package to be unveiled by Truss in one of her first acts as leader in a bid to alleviate pressure caused by soaring energy costs.

Greggs led the way for fmcg, surging 6.9% to 1,969p, while high street bellwether Next also rose 2.8% to 6,204p, M&S increased 4.8% to 129.6p and Primark owner Associated British Foods jumped 2.1% to 1,508p.

Supermarkets Tesco and Sainsbury’s also benefitted from investor optimism, climbing 2.7% to 256.3p and 2.8% to 210.8p respectively.

Fallers included Bakkavor, down 5.8% to 90.4p ahead of this morning’s results, Science in Sport, down 3.9% to 27.1p, and Virgin Wines UK, down 2.9% to 50p.