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Bakkavor sees UK growth hindered by challenging market

Bakkavor Group, the leading provider of fresh prepared food, has today announced its half year unaudited results for the 26 week period ended 29 June 2019.

Group revenue rose by 1.4% to £923m, and group like-for-like revenue was up 2% to £877.9m.

UK performance was inhibited by a very challenging market, with 0.7% increase to £772.2m, while international growth accelerated by 12.7% to £105.7m.

Adjusted EBITDA pre IFRS 16 was down 6.5% to £73.5m with margins down 60bps as expected.

Operating profit was impacted by £13.1m of exceptional costs and £8.3m of start-up losses for new sites.

During the period, the group acquired Blueberry Foods in Leicester, strengthening its market leading desserts capability.

The company also closed its meals site in Lincolnshire to protect profitability.

Bakkavor's UK meals business is set to benefit from launch of significant business gain in H2 2019.

Agust Gudmundsson, CEO, said, “During a challenging period, I’m pleased by the resilience we’ve shown across the business to deliver a solid first half performance. 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.

“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, we currently expect an uplift in performance, boosted in the UK by the impact of new business and an easing of raw material inflation. Our International business is making further progress and therefore the Group remains confident in delivering full-year performance broadly in line with 2018.

“Looking further ahead, we believe that our strategy, combined with our scale and expertise, leaves us well placed to capitalise on future growth opportunities.”