Bakkavor H1 profit drops as UK remains challenging

(Sharecast News) - FTSE 250 food manufacturing company Bakkavor reported a drop in first-half pre-tax profit on Tuesday as trading in the UK remained challenging but the international business performed well.
In the 26 weeks to 29 June, pre-tax profit fell 58.6% to £19.5m as revenue ticked up 1.4% to £923m. Group like-for-like revenue was up 2% to £877.9m. Bakkavor said UK LFL revenue "held" in a "very challenging" market, with a 0.7% increase to £772.2m, while the international segment saw 12.7% growth to £105.7m.

Basic earnings per share fell to 3p from 7p in the first half of last year and the interim dividend was maintained at 2p a share.

Chief executive officer Agust Gudmundsson said the company had shown resilience during "a challenging period".

"While the trading environment in the UK is still uncertain, we remain positive of our long-term prospects and the demand for fresh prepared food," he said.

"Our UK operations have never been stronger and we're the clear market leader across all four of our core categories. I'm encouraged by developments made across our US business; improving efficiencies, streamlining our customer proposition and building sales across new sites. Our business in China continues to go from strength to strength, expanding both our customer base and product offering."

Despite a subdued start to the second half, Bakkavor expects an uplift in performance, boosted in the UK by the impact of new business and an easing of raw material inflation.

At 0822 BST, the shares were up 1.2% at 108.68p.