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Bakkavör: horsegate ‘impacted consumer confidence’

By Mike Stones , 22-Feb-2013
Last updated on 22-Feb-2013 at 11:16 GMT2013-02-22T11:16:09Z

Own-label chilled food manufacturer Bakkavör said consumer confidence had been dented by the horsemeat scandal, while reporting a 5.4% increase in like-for-like sales in its full-year results ended December 29 2012.

The firm’s ceo Agust Gudmundsson said: “The worries over contamination in the food chain have understandably impacted consumer confidence. Bakkavör remains absolutely committed to the highest standards of food safety and integrity and we are continuing to work with our customers, suppliers and the authorities on rebuilding consumer trust.”

Last week Gudmundsson joined bosses from nine firms – including Tesco, Greencore and Morrisons – in sending an open letter to the Prime Minister protesting against claims from Downing Street insiders that the retailers had remained silent on the horse meat scandal.

Tesco, Greencore and Morrisons

Meanwhile, Bakkavör reported total group revenue up by 1% at £1,694.2M for the year.

Earnings before interest, tax, depreciation and amortisation rose by 7% to £115.1M.

Cash flow generated from operations was up by nearly 5% at £40.7M.

Gudmundsson said: “The Group made good progress in 2012, particularly in the last quarter which gave the business momentum going into 2013. Although the economic climate remains tough, we are confident of our strategy and are well positioned in the chilled convenience market.”

The manufacturer’s UK business generated a revenue of £1.407M last year – contributing nearly 87% of group revenue and an increase of 1.4% on the previous year.

But on a like-for-like basis, Bakkavör delivered 5.5% growth in the year and 10.2% in the final quarter. Sales in the final quarter were up by 9.4%.

‘Strong seasonal offering’

The firm attributed the growth to “the successful delivery of a strong seasonal offering”. The result was also supported by its capital investment strategy over the past two years and increased spend on innovation, it claimed. More than 2,000 products were launched across the business last year.

New products in the UK included an extension of the New York Soup Co range and a new pizza category range.

It also launched an Indian meal range for Tesco.

Full-year growth was achieved almost entirely through increased volumes and new business, said the firm. Adverse factors during the period included: subdued consumer spending and unusually poor spring and summer weather, which dented the sale of cold eat products.

Revenue from Bakkavör’s international business was £181.6M last year, accounting for 11.4% of group revenue and a 2% rise on the previous year.

The firm’s North American and Asian businesses drove like-for-like revenue growth of 8% for the year and 7% for the final quarter.

Net debt on December 29 was £563.9M, down by £27.5M on the previous year.

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