Hovis Tasty Wholemeal bread

Source: Hovis

Hovis has returned to profitability in its first financial results under new leadership.

In its latest accounts for the 53 weeks to 30 September 2023, the 137-year-old bakery supplier reported operating profit of £3.2m, up from the £24.5m loss recorded during the 39 weeks prior.

Turnover at Hovis had almost tripled when compared to this shortened period, which had been adjusted to follow wheat harvest patterns – sales went up from £309.8m in FY2022 to hit £489m.

Meanwhile, gross profit nearly doubled from £52m to £102.6m, and EBITDA increased to £26.8m compared to the £6.7m deficit during the previous nine-month term.

This turnaround had been predicted in the previous financial statement from Hovis, and achieved following the appointment of former Allied Bakeries boss Jon Jenkins in October 2022.

Operating improvements and cost savings were said to have helped drive a step up in overall efficiency and customer service, with Hovis forced to raise its sliced bread prices to mitigate against the effects of inflation on commodity, distribution, and energy costs compounded by the war in Ukraine. It did, however, launch a budget white loaf in late 2022 targeted at consumers hit by the cost-of-living crisis.

Hovis Simple Soft White 800g

Source: Hovis

Hovis rolled out its low-priced Simple Soft White (800g) in reaction to the cost-of-living crisis

Having moved the business back into a sustainable financial position, Hovis said it is now focused on strengthening its competitive position in the market.

A new £2m advertising campaign voiced by actor Christopher Eccleston is being rolled out this week, reintroducing the brand’s tag line ‘as good today as it’s always been’. This, noted Hovis, is aimed at supporting volume growth in its core bread business.

Earlier this month, Hovis signed an exclusive three-year licensing agreement with Oxford-based start-up Modern Baker to expand on their existing manufacturing and distribution partnership of gut-healthy bread brand SuperLoaf.

Hovis is also strengthening its supply chain by upgrading its delivery fleet to ensure that all vehicles are less than 12 months old by the end of this year. The latest technologies will be used to drive lower emissions and greater fuel efficiencies.

Hovis’ third-party logistics business, which carries other bakery products to its customer stores, will be expanded on the back of this fleet investment as well. This will result in a reduction of food miles and waster, while further cementing key retailer relationships.

“We have made good progress in last 12 months, with much improved financial results, stronger relationships with major customers and more substantive growth platforms in place for the future,” commented Jenkins.

“This is a testimony to the hard work and dedication of our colleagues across our bakeries and distribution centres to lead the market on quality and service whilst always looking to improve the business week in, week out. Whilst the cost-of-living crisis and recessionary economic backdrop remain challenging our business remains well funded with strong shareholder support and we are looking forward to delivering sustainable growth for years to come,” added the CEO.