Bakkavor Regulatory News (BAKK)

14 January 2021

Bakkavor Group plc

Trading update 

A strong and resilient performance in unprecedented conditions 

Bakkavor, the international provider of fresh prepared food (FPF), provides an update on trading for the 52 weeks ended 26 December 2020, ahead of its full-year results announcement on 16 March 2021.

At a Group level, the encouraging recovery in sales reported at the end of H1 continued into the second half, with Group revenue for the full year 4.9% lower than the prior year and 4.9% lower on a like-for-like basis.

In the UK, we were reassured by a recovery in sales as the first COVID-19 lockdown was lifted, however, volumes were adversely impacted in the final quarter by further restrictions, particularly within the 'Food to go' category. Forward planning and preparation for the all-important Christmas period enabled us to maintain very high customer service levels and deliver Christmas volumes in line with the prior year. Overall, UK like-for-like sales for the full year were 5.3% lower than last year.

Looking at our International segment, the US business grew by 12.7% on a like-for-like basis as we benefited from the growing trend for FPF and greater collaboration with our customers.  This revenue uplift, together with a strategic restructuring of our operations, has led to a turnaround in performance and secured sustainable and profitable growth for the second half of the year.

The growth reported within the US was, however, offset by a decline in revenues of 21.6% in China; our business most severely impacted by the pandemic. Whilst we continued to see reduced demand in Hong Kong due to ongoing civil unrest, we saw a steady improvement in sales in mainland China in the second half of the year, giving us confidence in the overall recovery in the region. 

Decisive mitigating actions were taken to lower our cost base and preserve cash at an early stage of the pandemic. We rapidly adapted factory operations and completed strategic restructurings in all regions to accommodate lower volumes. As a result, when combined with improved trading in H2, the Group believes it will deliver adjusted EBITDA (pre IFRS 16) for the full year broadly in line with the £138m reported in the prior year.  Furthermore, we maintained our focus on cash management, which included a temporary reduction in non-essential capital expenditure and a suspension of dividend payments. We therefore continue to operate with significant headroom of £200m against our debt facilities of £537.5m.

Thorough planning ensured we were well-prepared ahead of the UK's exit from the European Union on 31 December 2020. We worked closely with suppliers and customers to put in place processes to mitigate any adverse risk to supply, and we continue to support colleagues in obtaining UK settled status. Although it is early days, these measures have minimised disruption to our business and our supply chain continues to operate effectively.

Agust Gudmundsson, Chief Executive Officer, said:

"These are unprecedented times but the hard work and dedication of our teams, together with our scale and long-standing customer relationships, has delivered a strong and resilient performance. I am incredibly proud of our colleagues who have gone above and beyond in the toughest of circumstances. Their performance has been exceptional and I would like to thank them once again.

"Notwithstanding the ongoing impact of COVID-19, we have a sound business model and solid platform that leaves us well placed to navigate the current environment and achieve long-term sustainable growth."

ENQUIRIES

ABOUT BAKKAVOR 

Bakkavor is the leading provider of fresh prepared food ("FPF") in the UK, with a growing international presence in the US and China. The Group is the number one by market share in the UK in the four FPF product categories of meals, salads, desserts and pizza & bread, providing high-quality, fresh, healthy and convenient food. Its customers include some of the UK's leading grocery retailers, including Tesco, Marks & Spencer, Sainsbury's and Waitrose. The Group's International segment operates in the US and China. Bakkavor was founded in 1986 and has its headquarters in London. The Group has over 20,000 employees and operates 23 factories in the UK, 5 in the US and 9 in China. 

DISCLAIMER - FORWARD-LOOKING STATEMENTS 

This statement, prepared by Bakkavor Group plc (the "Company"), may contain forward-looking statements about Bakkavor Group plc and its subsidiaries (the "Group"). Forward-looking statements involve uncertainties because they relate to events, and depend on circumstances, that will, or may, occur in the future. If the assumptions on which the Group bases its forward-looking statements change, actual results may differ from those expressed in such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update these forward-looking statements. Nothing in this statement should be construed as a profit forecast. Some numbers and period on period percentages in this statement have been rounded or adjusted in order to ensure consistency with the financial information. 

LEI number: 213800COL7AD54YU9949