Wrapped bread player Hovis has fallen to a near £30m loss amid delays in passing through soaring input costs.
Newly filed accounts for Hovis Group for the 38 weeks to 24 September 2022 showed the group falling to a pre-tax loss of £28.6m from a profit of £47.3m in the previous 14 month period to 31 December 2021.
Comparable sales for the shortened period were 309.8m, up 15.2% on a pro-rata basis.
However, gross margin dropped markedly from 22.8% to 16.8% as the group was affected by ingredient and energy costs, and the “highly competitive” supermarket grocery environment for bakery.
Hovis said it recovered commodity inflation where possible and drove supply chain efficiencies, however its financial results reflected the delay between inflationary pressures and the recovery of elevated costs.
Hovis, which was acquired by private equity player Endless in November 2020 from joint owners Gores Group and Premier Foods, said earnings had continued to recover in its current financial year and it expects to return to EBITDA profitability in the period as it has recovered costs through pricing since September 2022.
A Hovis spokesperson commented: “Significant cost inflation has had an impact on profitability in the nine-month period ending September 2022 as we worked hard to minimise the impact on consumers and customers during a year of unprecedented price volatility.
“Having now recovered commodity inflation, we expect bread pricing to stabilise for 2023 and beyond. As we close the full year to end September 2023, we are confident that we will be able to report a return to strong profitability and with materially improved EBITDA performance.
“The business is well funded with strong shareholder support and under our strengthened leadership team the business is looking forward to delivering sustainable growth for the years to come.”
The brand said it remained the most successful of the major grocery bakery suppliers in terms of maintaining market share and was the largest branded contributor to category growth in 2022.
In particular, is said its 1886 range drove growth through repeat purchases and new product launches.