TIDMBAKK
RNS Number : 1850N
Bakkavor Group PLC
19 January 2023
Full year 2022 trading update
Solid performance in line with expectations, executing our clear
plan to protect future profits
Bakkavor Group plc (the "Company") and its subsidiaries
("Bakkavor" or "the Group"), the leading international provider of
fresh prepared food ("FPF"), today updates on trading for the 53
weeks to 31 December 2022 ("FY22"), ahead of the publication of its
full year results on 8 March 2023.
Like-for-like
Reported (1) ('LFL')
revenue revenue
GBP million 53 weeks Growth 52 weeks LFL growth
------------ --------- ------ ------------- ----------
Group 2,139.2 14.3% 2,069.0 10.6%
UK 1,783.1 12.0% 1,752.3 10.0%
US 255.3 41.8% 226.2 25.6%
China 100.8 1.7% 90.5 (8.6)%
------------ --------- ------ ------------- ----------
Robust growth, performance in line with market expectations and
strong balance sheet
-- Group reported revenue exceeded GBP2bn for the first time, up
14.3% on the prior year and LFL revenue up 10.6%. Driven primarily
by price in the UK, along with strong volume growth in the US,
while Covid impacted volumes in China.
-- FY22 Group adjusted operating profit remains in line with
market expectations(2) . Whilst we have been successful in largely
mitigating inflation through pricing and internal levers, there has
been some impact on profits, which are down year-on-year.
-- This reflects a solid performance in the UK; market share
gains underpinned by high service levels and breadth of product
portfolio, and Christmas trading in line with expectations and
well-executed operationally.
-- In the US, performance was impacted by disruption from taking
on board volume growth and, as reported in our Q3 2022 trading
update, a contractual dispute with a customer at one site since
November. In China, profitability continued to be impacted by
Covid.
-- Investment in our people, through pay increases and
engagement activities, has had a positive impact, and wider labour
market pressures eased through the year.
-- We delivered progress against sustainability commitments
including through refrigeration upgrades and energy initiatives,
along with targeted action on food waste.
-- Strong balance sheet maintained; leverage within target
range, significant liquidity headroom, and good level of protection
against interest rate rises.
A clear plan to protect profits in 2023, with actions
underway
-- As significant headwinds will persist in our markets through
2023, we have implemented a Group-wide plan to protect profits, as
previously announced.
-- Our plan, which includes a leaner organisation structure,
refreshed clear and focused regional priorities, and enhanced
emphasis on managing cash, will deliver savings of GBP15m in FY23,
and GBP25m on an annualised basis.
-- Actions are well progressed with the new Management Board and
leadership structure established, the UK business operationally
consolidated from four to two sectors, Meals and Bakery, and the
consultation at two UK sites concluded, on track to close and
transfer volume in H1 2023.
-- In the US, we have a renewed focus on operational performance
to improve margin sustainably and whilst near-term challenges
remain in China, we are well-positioned to capitalise on the future
growth opportunity when conditions normalise.
-- The cash costs of implementing the plan are expected to be
c.GBP20m, with most of the cash outflow in FY23. These costs,
together with c.GBP35m of non-cash impairment charges(3) , will be
recognised as exceptional items in FY22.
-- This decisive action, combined with our scale and breadth,
customer relationships and balance sheet strength provide us with a
stronger platform to move forward with purpose and confidence.
Mike Edwards, CEO, commented:
"Despite 2022 being another challenging year, Bakkavor delivered
a robust performance and once again demonstrated the strength of
our customer relationships and the resilient foundations of our
business. The relentless commitment and agility that our people
have shown set us apart through this difficult period, and I would
like to thank everyone for their hard work.
"Whilst market challenges will persist in 2023, the actions we
are taking to protect profits, our clear strategy and our balance
sheet strength, allow us to move forward with purpose and
confidence, enabling us to deliver on our medium- to long-term
ambitions."
1. LFL revenue is revenue from continuing operations adjusted
for the revenue generated from businesses closed or sold in the
current and prior year, revenue generated from businesses acquired
in the current and prior period, and the effect of foreign currency
movements. FY22 included 53 weeks of trading, compared to 52 weeks
in FY21. LFL revenue excludes the 53(rd) week in FY22. All other
FY22 measures include the 53(rd) week.
2. Based on company compiled consensus ("Consensus") which
includes; Berenberg, Citi, Goodbody, HSBC, Investec, Kepler, Numis
and Peel Hunt. Adjusted operating profit Consensus for 2022 of
GBP88.6m, with a range of GBP86.7m to GBP90.3m.
3. Non-cash impairment charges of c.GBP35m include c.GBP21m from
the closure of two UK sites, a c.GBP10m impairment of our
investment in associate in Hong Kong due to the ongoing impact of
Covid on trading performance, and the balance relates to an
impairment of inventory and receivables associated with the
contractual dispute with a US customer.
ENQUIRIES
Institutional investors and analysts:
Ben Waldron, Chief Financial Officer
Emily Daw, Head of Investor Relations +44(0)20 7908 6114
Financial media: bakkavor@mhpgroup.com
Katie Hunt, MHP +44(0)20 3128 8794
Rachel Farrington, MHP +44(0)20 3128 8613
Oliver Hughes, MHP +44(0)20 3128 8622
About Bakkavor
We are the leading provider of fresh prepared food ("FPF") in
the UK, and our presence in the US and China positions the Group
well in these, high-growth markets. We leverage our consumer
insight and scale to provide innovative food that offers quality,
choice, convenience, and freshness. Over 19,000 colleagues operate
from 46 sites across our three markets supplying a portfolio of
over 3,200 products across meals, pizza & bread, salads and
desserts to leading grocery retailers in the UK and US, and
international food brands in China.
LEI number: 213800COL7AD54YU9949
Disclaimer - forward-looking statements
This statement includes forward-looking statements. By their
nature, forward-looking statements involve risk, uncertainty and
other factors, which may cause the actual results and developments
of the Group to differ materially from any results and developments
expressed or implied by such forward-looking statements. You should
not place undue reliance on any forward-looking statements. These
forward-looking statements are made as of the date of this
statement. The Group is under no obligation to publicly update or
review these forward-looking statements other than as required by
law.
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END
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