Bakkavor FY adjusted operating profits seen at 'lower end' of consensus

Food manufacturer Bakkavor cautioned on Wednesday that it expects full-year adjusted operating profits to remain within, but "at the lower end" of market expectations.

Bakkavor delivered "robust growth" in reported revenues, up 15% year-on-year at £542.5m, while like-for-like revenues were 12.7% higher in the 13 weeks to 25 September.

UK like-for-like revenue growth was said to be largely driven by price, while volumes held up through the Summer, and, although pressure on household budgets impacted volumes in September, Bakkavor still managed to outperform the FPF market and gain market share.

However, Bakkavor said the recent threat of industrial action at one of its UK sites, and a contractual dispute with one of its US-based customers, which will likely impact profits in the remaining weeks of the year, had both led it to predict operating profits slipping to the lower end of consensus range.

Chief executive Mike Edwards said: "We continue to operate in an incredibly challenging environment. Bakkavor has proven itself to be a resilient business effectively navigating the turbulence of recent years. We are now taking further decisive action to ensure we deal with the ongoing headwinds and protect future profits.

"These actions, combined with our strong balance sheet, breadth of capability and products, customer relationships and growing market share, means we are well-placed to deal with the short-term challenges, and deliver our longer-term ambitions for colleagues and stakeholders."

As of 0910 GMT, Bakkavor shares were down 6.25% at 88.50p.

Reporting by Iain Gilbert at Sharecast.com