Bakkavor Group PLC Reports Strong First Half Performance and Upgrades Full Year Outlook

Bakkavor Group PLC has released its unaudited half-year results for the 26-week period ended July 1, 2023. The company reported a strong financial performance, with like-for-like revenue up 7.4% and reported revenue up 7.9%. Adjusted operating profit increased by 2.1% to £43.4 million, while operating profit rose by 12.7% to £46.3 million. Bakkavor also generated strong free cash flow of £51.6 million and reduced its operational net debt by £16.2 million. The company's interim dividend will be 2.91p, up 5.0% from the prior period.

Bakkavor attributed its strong performance to restructuring plans across three focus areas: a leaner organizational structure, clear and focused regional priorities, and enhanced cash management. The company's restructuring efforts have resulted in synergies and efficiencies ahead of expectations, with savings of £17 million expected in FY23. Bakkavor's regional priorities have had a positive impact on performance, with volume outperforming the market in the UK, business stabilization in the US, and volume recovery in China.

Based on its strong first-half performance and positive momentum, Bakkavor has upgraded its full-year outlook. The company now anticipates adjusted operating profit for FY23 to be at least in line with the prior year of £89.4 million, which is approximately £4 million ahead of current consensus. Bakkavor's revised outlook is supported by restructuring savings, a strong pipeline to support UK share gains, ongoing volume recovery in China, and strong cash generation.

CEO Mike Edwards expressed satisfaction with the company's performance and highlighted the contributions of Bakkavor's employees. He also emphasized the company's market share gains in the UK and the progress made in the US and China. Edwards stated, "We are confident in delivering an upgraded full year performance, with adjusted operating profit now anticipated to be at least in line with last year and ahead of current market expectations." He added that the company is in a strong position to capitalize on opportunities going forward.