Bakkavor first quarter growth lifted by contract wins

By Rod Addy

- Last updated on GMT

Bakkavor makes a range of prepared foods and is on a new product development drive
Bakkavor makes a range of prepared foods and is on a new product development drive
Bakkavor has reported strong sales and profit growth in its first financial quarter (Q1), boosted considerably by new contracts and product development in the UK.

“Our UK division generated revenue of £364.1M in the quarter, an increase of 6.2% on the prior year and ahead of the fresh prepared food market,”​ the company said in a Q1 results statement.

“Growth was principally volume driven, boosted by wins across a number of categories including food-to-go, salads and ready meals. We also launched over 250 products in the quarter, with particular success delivering new lines focused on healthy living.

“The milder weather in the quarter also supported growth in our cold eat categories, allowing us to capitalise on recent investments at a number of sites.”

Cost control measures

The manufacturer said it had shrugged off rising input costs through productivity enhancements, efficiency benefits and strict cost control measures.

Some of the efficiencies in the UK had been achieved through restructuring and redundancies, which had cost the firm £3.3M during the quarter, according to Bakkavor.

However, the benefits of this reorganisation, including a forthcoming “strong pipeline of new products” ​and a closer relationship with customers would pay off later this year, it claimed.

Redundancies

The previously announced redundancies mainly affected middle management within the business and were unlikely to have much impact at plant level, a Bakkavor spokesman told FoodManufacture.co.uk.

“The restructuring is now firmly underway already, resulting in greater efficiencies and an uptick in new products,”​ he added. “The benefits are expected to be very significant.”

On the international stage, the company announced the sale of 40% of Italpizza, its Italian pizza manufacturing business to Dreamfood, an investment company controlled by Italpizza’s senior management.

Bakkavor reported like-for-like revenue up 6% in the 13 weeks to March 29, from £389.7M in the same period in 2013 to £414.3M. Adjusted pre-tax profit rose 7%, from £22.2M to £23.7M, comparing the same periods.

‘New products’

“It has been another quarter of good growth for the group as we partner closely with key customers and deliver new products,”​ said ceo Agust Gudmundsson.

“We expect the trading environment to continue to be challenging with the UK grocery market remaining highly competitive. However, we are confident in our strategy and are focused on the long-term objectives for the group.”

At the end of March, Bakkavor announced it was recruiting to fill 270 positions after officially opening its extension to its Wingland Foods factory​, which supplies Waitrose salads.

The company makes own-label foods across 18 product categories, including ethnic snacks, soups, sauces, desserts and smoothies, for top UK supermarkets such as Tesco and Sainsbury and foodservice customers.

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