Bakkavor FY trading performance strong despite 'unprecedented challenges'

Food manufacturer Bakkavor said on Thursday that it had delivered "a robust financial performance" across all its regions during 2021 despite "unprecedented challenges" in the form of supply chain constraints, labour shortages and cost inflation.

Bakkavor stated full-year reported revenues were up 4.4% year-on-year, while on a like-for-like basis, revenue increased 6.2% compared to 2020 and 1.2% compared to 2019's pre-Covid comparative.

Operating margins were expected to be ahead of previous guidance and at the top end of the range of current market expectations of 5.0-5.2%, reflecting the firm's scale and category leadership, strong relationships and strict focus on cost control, all of which helped to mitigate cost inflation and labour shortages, as well as drive year-on-year efficiency improvements.

The London-listed firm highlighted that its positive recovery in the UK had been driven by strong demand, while, in the US, it continued to enhance strategic partnerships and deliver strong growth. Bakkavor also pointed to a "steady recovery" in China, with strategic investments now largely complete.

Bakkavor added that its improved trading performance had supported a reduction in net debt and brought leverage within its medium-term target range at 1.9x and also noted that its liquidity position remained "strong", with significant headroom of over £190.0m against its debt facilities of £489.0m, of which the majority mature in 2025.

Chief executive Agust Gudmundsson said: "We have confidence in our ability to continue to build on the positive revenue momentum through 2022 as demand for our fresh, convenient, and innovative products remains strong. The significant challenges facing our industry are, however, persisting; we remain focused on mitigating the impact, as well as managing the current heightened uncertainty associated with the Omicron Covid-19 variant.

"Looking forward, we remain positive about the medium-term growth opportunity and believe the group is well placed to deliver enhanced returns for shareholders."

As of 1020 GMT, Bakkavor shares were down 0.79% at 125.0p.