Iceland-based international fresh prepared food company Bakkavör has seen a fall in year-on-year operating profit of 36 per cent for the first half of 2008, as soaring costs and business restructuring continued to hit home.
Despite a slight growth in like-for-like sales of 0.5 per cent (2.5 per cent for the second quarter), earnings before interest, tax, depreciation and amortisation (EBITA) dropped 23 per cent during the period. Cash flow from operating activities also fell, down to €19.7m (£15.5m).
'Bakkavör Group's half-year results are in line with our expectations with sales performance starting to improve in the second quarter,' said group CEO ágúst Gudmundsson. 'The group's profitability continues to be affected by ongoing increases in raw material and utility costs, compounded by the strength of the euro against the pound, strategic restructuring, the downturn in consumer confidence as well as unsettled summer weather in the UK.'
Group profit was also affected by a fall in the share price of Greencore Group, in which Bakkavör owns a 10.9 per cent stake.
Despite that blow, the group continued to strengthen its global position during the first half, with acquisitions in China, Italy, the US and two in Hong Kong,
'Looking ahead, the trading environment is expected to remain tough in the second half of the year and we will continue to focus on driving market share growth, recovering inflationary costs, improving operational efficiencies and restructuring parts of the business where necessary,' Mr Gudmundsson added. 'While we see significant growth opportunities in the UK market, we will continue to expand in continental Europe, Asia and North America to realise our goals and meet the growing consumer demand for fresh prepared foods globally.'
