Fresh and prepared food specialist Bakkavor has reported a 5% increase in like-for-like sales and a significant increase in margins for the first half year.
The company’s like-for-like revenue was £856.8 million for the 26 weeks to 28 June, with pre-tax profits of £2.9 million comparing favourably with a £1.8m loss a year earlier.
Bakkavor said the fresh prepared food market had softened in recent months with a reduction in promotional activity and subdued consumer spending, adding its UK division had outperformed the market generally by generating £394.2m of revenues in the latest quarter.
Growth was predominantly volume-driven as the annualised effect of recent business wins offset the weaker underlying market, it said.
Improvement in margins came on the back of a restructuring of its UK business, which included the transfer of its frying business to a new facility and the closure of the old one, as well as a number of contract wins and the withdrawal from other low-margin business.
“The Group delivered a strong first-half performance, building our market share while also improving margins,” said chief executive Agust Gudmundsson. “We expect the trading environment to continue to be challenging with the UK grocery market highly competitive.
“Although the discounters continue to gain ground, we remain absolutely committed to supporting the growth plans of our existing customers. To achieve this, we are significantly increasing our capital spend to underpin recent business wins and we continue to invest heavily in product innovation.”
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