Bakkavor has posted half-year pre-tax profits up from £2.9m to £6.2m on revenue up 3% from £842.1m to £846.4m.
Agust Gudmundsson, chief executive, said the second quarter had seen good progress but he expected the trading environment to continue to be challenging because of a combination of price deflation and a highly competitive grocery market. The company specialises in private label fresh prepared foods for top global grocery retailers and foodservice operators
“We remain focused on our core strategic objectives of close partnering with our customers and selective investment to drive growth, technical excellence and product innovation,” he said
Revenues in the second quarter climbed 1.5% to £440.9m year on year, or up 0.5% on a like-for-like basis and at constant currency, as strong performances from the international operations were largely offset by challenging UK market conditions.
UK revenue totalled £387.8m in the second quarter, reflecting the slowdown in growth seen by major customers, the ongoing impact of deflation and Bakkavor’s exit from low-margin business such as the recent closure of its Yorkshire fresh-prepared fruit facility.
The company, whose UK customers include, Tesco, Marks & Spencer, Sainsbury’s, Waitrose, Asda and Morrisons, said it had passed on price reductions from raw material deflation, but it continued to see pressure on labour costs across its operations and this was likely to accelerate with the introduction of the national living wage next April.
Bakkavor said it continued to be the number one producer by value in 13 of the 16 categories of chilled food it supplies to the market in the UK. Products include ready meals, pizzas, salads, desserts, soups and sauces. It also has operations in Continental Europe, the US and Asia.
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