REG - Bakkavor Group PLC - Full year 2022 trading update

BakkavorAnnouncement

19/01/2023 07:00

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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.

 £ million     Reported     Growth    Like-for-like(1) ('LFL') revenue  LFL growth

               revenue                52 weeks

               53 weeks
 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 £2bn 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 £15m in FY23, and £25m 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.£20m, with most of the cash outflow in FY23. These costs, together with
c.£35m 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 £88.6m, with a range of
£86.7m to £90.3m.

3.     Non-cash impairment charges of c.£35m include c.£21m from the
closure of two UK sites, a c.£10m 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 (mailto: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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