Bakkavor has an improved outlook for 2024 following a strong first quarter performance and a return to volume growth in the UK.
Group like-for-like sales at the food-to-go giant hit £543.3m for the 13 weeks to 30 March 2024, representing 3.2% growth from the same period the year prior.
It noted this was predominantly driven by its UK business, which recorded revenue of £458.4m for a 4.1% increase on Q1 2023 sales. This was slightly better than the 3.9% growth in UK sales posted in its financial results for last year.
Bakkavor said its UK volumes had strengthened through the quarter, supported by improving consumer confidence, successful innovation, and excellent service. Its LFL revenue in the US dropped by 5.8% to £57.7m, while sales in China continued to rise, going up by 9.8% to reach £27.2m.
With a strong profit performance and continued focus on operational efficiency across the group, the manufacturer was upgrading its guidance for full-year operating profit with a new range of between £103m and £108m.
Its leverage (ratio of operational net debt to adjusted EBITDA) was reduced to 1.4x, which Bakkavor noted came from improvements in profitability and working capital. The encouraging financial performance was replicated in non-financial KPIs, it added, including good progress in food waste, and carbon emissions.
Bakkavor revealed confidence in delivering ahead of current market expectations, based on further synergies and efficiencies in the UK following the successful implementation of its 2023 plan, with inflation moderating and price recovery secured. It also revealed it was accelerating profit improvement in the US, and stability in China, which it said continues to be cash generative and self-funding.
One of the strategic transactions completed post-Q1 was the sale of its bakery business in China, which it noted helped further simplify its operations in the region and lead to a profit disposal of around £3.5m.
“Last year we executed a dynamic plan to reset the business and I am delighted that the momentum this has created across the Group has underpinned our strong Q1 performance,” commented Bakkavor CEO Mike Edwards.
“All three regions are making excellent progress against the Group’s strategic priorities of rebuilding margins and reducing leverage and, as a result, we are confident in delivering our increased guidance for 2024,” he added.
Bakkavor currently operates 43 sites across the UK, US, and China, employing around 18,000 colleagues and supplying a portfolio of over 3,000 products including meals, pizza & bread, salads, and desserts to grocery retailers and international food brands. It owns The Delicious Dessert Company, which recently launched Millionaire’s and Cookies & Cream Cheesecakes at Asda stores.
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