Bakkavor resists cost increases to grow market share

The convenience foods manufacturer posted 3.8% growth in full-year revenue, ahead of the 1.5% increase in the value of UK fresh prepared foods, its core area of activity.

“Our market share has grown for the third consecutive year and importantly we have increased year-on-year revenues with all of our key customers,”​ the company stated. The performance had been fuelled by a rise in the amount of product it sold, rather than price increases, it claimed.

‘Year-on-year inflation’​

“Although food price deflation has been widely reported in the media, we experienced year-on-year inflation across our total cost base, including utilities and labour,”​ the company said.

“Looking forward into 2015, there remain pockets of significant inflation for certain key ingredients such as chicken and seafood, and we continue to see pressure on labour costs in a period of rising employment.”​

However, it had made good progress in projects designed to cut costs and increase efficiency across the past year, it said. Previously announced investments in salad​, pizza and bread​ production had enabled it to increase capacity, it added.

Revenue growth​

Bakkavor reported UK full-year revenue growth of 3.8%, from £1.46bn to £1.52bn in the 52 weeks to December 27. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) climbed by 8%, from £104.1M to £112.9M.

UK Q4 sales rose by 3% from £369.7M to £380.2M and adjusted EBITDA rose by 12%, from £24.8M to £27.7M over the period.

Full-year group adjusted EBITDA rose by 9% to £119.9M on like-for-like revenue up 4% to £1.7bn. In the Q4 period, group adjusted EBITDA increased by 14% to £30.5M on like-for-like revenue up 4% to £435.5M.

“In a tough trading environment with low market growth, the group has made good progress, increasing revenues, market share, margins and cash generation,”​ said Bakkavor ceo Agust Gudmundsson.