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On Thursday, Bakkavor Group (LSE:BAKK), a provider of fresh prepared foods, reported robust first-half results, showcasing revenue growth, improved profit margins, and a reduction in debt.
The FTSE 250-listed company saw a 2.8% increase in revenue, reaching £1.12 billion. Like-for-like revenue grew by 3.8%, primarily driven by strong performance in its UK operations. Adjusted operating profit surged by 26.7% to £55 million, resulting in a profit margin of 4.9%.
Bakkavor made significant strides in reducing its financial leverage, cutting operational net debt by £27.8 million to £201.8 million. This reduction brought the leverage ratio down to 1.2 times. Additionally, the company raised its interim dividend by 10% to 3.2 pence per share.
Strategic progress across various regions contributed to the improved results. In the UK, volume growth and operational efficiencies enhanced profit margins. Meanwhile, in the US, profitability improved even with a decline in revenue. Bakkavor also streamlined its operations in China, which led to reduced losses and steady cash generation.
The company advanced its sustainability initiatives in the UK, although international net carbon emissions increased. Bakkavor upgraded its full-year 2024 outlook, anticipating adjusted operating profit between £108 million and £112 million, which exceeds market projections. The company aims to rebuild its operating profit margin to 6% in the medium term through ongoing efficiency improvements.
Chief Executive Officer Mike Edwards highlighted the strong performance in the first half of the year, attributing it to the continued benefits of the restructuring undertaken in 2023. Edwards expressed confidence in further margin improvements as the trading environment stabilizes and emphasized the company’s focus on driving efficiency across all operations.
In a separate announcement, Bakkavor revealed that Group Chief Financial Officer Ben Waldron would step down on October 31 and depart from the company by the end of April next year. Waldron, who has been with Bakkavor for nearly 14 years, is relocating to Australia. He played a significant role in the company’s initial public offering, strategic development, and navigating the impacts of the Covid-19 pandemic.
Lee Miley, currently the UK Finance Director, will succeed Waldron as CFO and executive director effective November 1. Miley, a long-standing Bakkavor employee since 1998, brings extensive experience in finance, mergers and acquisitions, operational excellence, and ESG.
Chairman Simon Burke expressed regret over Waldron’s departure but welcomed Miley’s appointment, highlighting the importance of continuity and succession planning. As of 10:25 BST, Bakkavor’s shares had risen by 3.71%, reaching 159.72 pence.
