Bakkavor posts strong first-half growth, CFO steps down

The FTSE 250 company reported a 2.8% increase in revenue to £1.12bn, with like-for-like revenue up 3.8%, driven primarily by its UK operations.

Adjusted operating profit rose 26.7% to £55m, resulting in a 4.9% profit margin.

Bakkavor achieved significant operational improvements, reducing operational net debt by £27.8m to £201.8m and lowering its leverage ratio to 1.2x.

The company also raised its interim dividend by 10% to 3.2p per share.

Bakkavor credited strategic progress across its regions for the improved results.

In the UK, volume growth and operational efficiency boosted margins, while in the US, profitability strengthened despite lower revenue.

The company simplified its China business, reducing losses and maintaining cash generation.

Additionally, sustainability efforts in the UK were advancing, though international net carbon emissions increased.

Looking ahead, Bakkavor upgraded its full-year 2024 outlook, expecting adjusted operating profit between £108m and £112m, surpassing market expectations.

The company said it was aiming to rebuild its operating profit margin to 6% in the medium term through ongoing efficiency improvements.

“This has been a strong first half for the group, with momentum from our 2023 restructuring activity continuing to support our performance in 2024,” said chief executive officer Mike Edwards.

“We are firmly focused on continuing to rebuild margins and we are pleased to upgrade guidance for 2024 as we look to drive efficiency in every part of our business.”

Edwards said the company was “excited” about building a stronger Bakkavor as the trading environment improved, adding that the firm was continuing to leverage the benefit of the actions taken over the last couple of years.

“As such we have a good line of sight to deliver further margin improvement as we move into 2025 and beyond.”

In a separate announcement on Thursday, Bakkavor revealed that group chief financial officer Ben Waldron would step down on 31 October, and leave the business by the end of April next year.

Waldron, who had been with the company for almost 14 years, was relocating to Australia to join his partner.

During his tenure, Waldron played a key role in Bakkavor’s initial public offering and strategy development, and guided the business through the Covid-19 pandemic as US chief executive.

Lee Miley, currently the UK finance director, would succeed Waldron as CFO and executive director effective 1 November.

Miley, a longtime Bakkavor employee since 1998, had extensive experience in finance and broader responsibilities in mergers and acquisitions, operational excellence, and ESG.

The transition was expected to ensure continuity and momentum within the company.

“Ben has been a most excellent CFO and a pleasure to work with,” said chairman Simon Burke.

“We are very sorry to see him go, but we wish him well in Australia.

“Meanwhile we are really pleased to be appointing Lee as our new CFO, confirming our succession planning following a rigorous appointment process which included internal and external candidates.”

At 1025 BST, shares in Bakkavor were up 3.71% at 159.72p.

Reporting by Josh White for Sharecast.com.