Total revenue climbed 3% during the period and earnings before interest, tax, depreciation and amortisation reached £129.7M.
“The fresh prepared foods market grew faster than the wider UK grocery market over the year as consumer spending, while remaining subdued, has reflected a preference for convenient, high-quality chilled foods,” noted the manufacturer.
‘High quality chilled foods”
Reported revenues in our UK business over the year were £1.52bn, with underling growth impacted by deflation and the firm’s exit from low-margin business.
Bakkavor warned that labour costs had continued to accelerate and that the introduction of the National Living Wage in April will present a challenge for the while UK food sector.
The manufacturer said it was looking for ways to mitigate costs wherever possible.
UK investment projects last year included: ready meals automation, desserts and salads capacity improvements and capability improvements in bread and pizza.
‘Bakkavor’s 30th anniversary’
Bakkavor’s ceo Agust Gudmundsson said: “I am very pleased, as we celebrate Bakkavor’s 30th anniversary in 2016, we can report that the group is in a very strong position, with revenue growth, margin improvement and excellent cash conversion.”
Bakkavor’s turning point
“This marks a turning point for Bakkavor and we look forward to working with Baupost to deliver on our long term strategic objectives.”
- Agust Gudmundsson, ceo
Gudmundsson also underlined the significance of the “strengthening of the group’s ownership structure”, with the investment of new shareholder the Baupost Group LLC.
“This marks a turning point for Bakkavor and we look forward to working with Baupost to deliver on our long term strategic objectives,” he said.
Bakkavor said prospects for its UK business were encouraging. “We are confident about our UK business, given the positive dynamics and our ongoing ability to invest," it said in the results statement.
‘Continue to reshape our business”
But rising costs were likely to remain a challenge. “There will be pressure on growth as we continue to reshape our business and focus on rising labour costs. We wild seek to mitigate these pressures by continuing to drive productivity and control costs.”
The manufacturer's international business had benefited last year from the acquisition of B Robert’s Foods; a fresh prepared food business in North Carolina, USA.
Excluding the acquisition, international like for like revenues grew by 14%. The rise reflected stronger performances in the US and Asia, as the business benefited from increased consumer demand and geographic expansion, it claimed.
Meanwhile, last month the GMB union warned that up to 300 Bakkavor jobs were at risk, after the manufacturer allegedly lost significant business from Tesco.
Bakkavor investments last year
- Ready meals automation
- Capacity improvements for desserts and salads
- Capability improvements in bread and pizza