Icelandic fresh prepared specialist Bakkavör has reported a significant turnaround with the UK market at the spearhead of its improvement.
The group announced a net second quarter profit of £26.4 million, compared with a loss of £23.5m in the corresponding period of 2008.
UK fresh prepared food sales were at the forefront of this strong performance, increasing by seven per cent while ready meals also provided a positive source of income.
The group’s earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 5.7 per cent to £37.3m, up on £35.3m in 2008 and its EBITDA margin improved by 8.7 per cent over the same period.
It also announced cash inflow from operations, excluding one-off restructuring costs of £46.4m in the second quarter, are up 76 per cent on 2008.
The group expects trading in the third quarter to remain strong, with a 25 per cent increase in EBITDA in the quarter predicted, with a 20 per cent forecast for the year, equating to £130 million.
ágúst Gudmundsson, chief executive officer, said: ”As anticipated when we reported our first quarter results in May, Bakkavor has now returned to EBITDA growth following the successful implementation of our restructuring plan at the start of the year. Furthermore, our cash position has improved considerably reflecting greater operational efficiencies, a marked improvement in profitability and greater control of working capital. As the benefits of these actions become more pronounced, we expect our cash generation to continue to grow throughout the second half of the year.
“Group sales in our UK fresh prepared foods business are accelerating, with strong sales growth of 10 per cent in ready meals, one of our core drive markets. This demonstrates the inherent strength of our market positions, our operational flexibility and ability to adapt to a fast-changing marketplace.
“We now have a stable platform from which to grow the business going forward and our revised EBITDA guidance for the full year reflects our renewed confidence.
“At the holding company level, we are in the advanced stages of refinancing of all indebtedness. Our discussions with our Icelandic institutional creditors are constructive and we hope to announce a conclusion shortly. These discussions follow the successful renegotiation in March of facilities for our operating business providing fully secured financing for the next three years.”
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