REG - Bakkavor Group PLC - Full Year 2023 Trading Update

BakkavorAnnouncement

18/01/2024 07:00

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RNS Number : 0541A  Bakkavor Group PLC  18 January 2024

Full year 2023 trading update

2023 profits, net debt and leverage ahead of market expectations with
encouraging outlook for 2024

Bakkavor Group plc ("Bakkavor" or the "Group"), the leading international
provider of fresh prepared food ("FPF"), today updates on trading for the 52
weeks to 30 December 2023 ("FY23"), ahead of the publication of its full year
results on 5 March 2024.

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

               revenue
 Group         2,203.8   3.0%          2,214.2                           5.3%
 UK            1,852.7   3.9%          1,852.7                           5.7%
 US            229.4     (10.1%)       230.6                             (8.4%)
 China         121.7     20.7%         130.9                             32.0%

 

2023 profits, net debt and leverage all expected to be ahead of market
expectations

·      LFL revenue up 5.3% driven by price, as well as volume recovery
in China

·      UK: Continued to win market share, driven by strong service,
targeted innovation and net business gains

·      US: As previously guided, focus shifted from revenue growth to
profit, with a return to profitability in H2 after a break-even H1

·      China: Seamlessly built back volumes and continued to diversify
into the retail channel, importantly the business is now cash generative and
self-sustaining

·      Our Group-wide plan to protect profitability, which we enacted in
November 2022, has delivered synergies and efficiencies ahead of our
expectations

·      The Group anticipates FY23 Group adjusted operating profit to be
at least in line with the upper end of the range of market expectations(2)

·      Our focus on working capital improvement, combined with a
targeted approach to capital expenditure, delivered a further reduction in
operational net debt in the second half, with the full year outturn
significantly ahead of market expectations(3), at c. £230m. As a result,
leverage is also ahead of expectations

 

Encouraging outlook for 2024

·      Momentum is building in all three regions, with refreshed
priorities providing clear direction to our local teams, which will underpin
delivery in 2024

·      2024 revenue to be slightly ahead of 2023, as we expect volumes
to remain subdued given the continued challenging consumer environment in the
UK and the reshaping of our US business

·      Despite this, we are confident 2024 will be another year of
increased profitability as we continue to effectively mitigate inflation and
drive internal improvements

·      We will continue our focus on leverage reduction, despite
increasing capital investment, through sustaining working capital improvements
and increasing profitability

Development in the Group's ownership structure

·      As announced on 15 January 2024, Baupost, who previously held a
significant shareholding (20.1%) in the Group, have now sold this entire stake
to LongRange Capital

·      Bob Berlin, who leads LongRange, will join the Board as Patrick
Cook (Baupost's representative) steps down

·      Bob previously held a position on our Board, between January 2016
and July 2018. He has a wide range of experience holding a number of strategic
roles in the consumer goods, food, technology and financial sectors

Mike Edwards, CEO, commented:

"2023 required us to develop a decisive and dynamic plan to successfully
manage another year of external challenges. We executed this plan at pace and
as a result we expect to deliver improved profitability and reduced leverage
for the full year.

As we enter 2024, momentum is building in all three regions, which gives us
confidence to deliver further financial improvements in the year ahead.  This
is clearly important as unprecedented levels of inflation have impacted profit
margins over the last two years.

I would like to take this opportunity to thank everyone at Bakkavor for their
continued commitment and energy during a year of significant change, which saw
the Group exceed expectations and set a clear path for delivery in 2024.

Finally, I would like to extend a warm welcome to Bob Berlin, who rejoins our
Board representing LongRange capital. He has a deep understanding of our
business as well as our markets and his experience will be invaluable as we
continue to build positive momentum and deliver our strategic ambition."

1.     LFL revenue adjusts reported revenue to exclude the additional
53(rd) trading week in FY22 and adjusts for the effect of foreign currency
movements.

2.     Based on company compiled consensus ("Consensus") which includes;
Citi, Goodbody, HSBC, Investec, Kepler, Numis and Peel Hunt. Adjusted
operating profit Consensus for 2023 of £90.2m, with a range of £89.7m to
£91.1m.

3.     Based on company compiled consensus ("Consensus") which includes;
Citi, Goodbody, HSBC, Investec, Kepler, Numis and Peel Hunt. Operational net
debt Consensus for 2023 of £273.6m, with a range of £256.4m to £298.2m.

 

ENQUIRIES

Institutional investors and analysts:

Ben Waldron, Chief Financial Officer

Richard Wooldridge, Interim 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 8100

+44(0)7884 494112

Rachel Farrington, MHP
                           +44(0)7801 894577

Oliver Hughes, MHP
                               +44(0)7885 224532

 

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 18,500
colleagues operate from 44 sites across our three markets supplying a
portfolio of over 2,900 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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