Bakkavor Group PLC: Half Year Results 2020

Reykjavik / IS. (bkg) Island’s Bakkavör Group, the United Kingdom’s leading provider of fresh prepared foods, on September 08 announced its half year unaudited results for the 26-week period ended 27 June 2020 (sorry for delay).

Financial Highlights

• Reduction in Group revenue limited to 4.6 percent at GBP 880.5 million and steady recovery since April into H2
• Group like-for-like revenue1 down 5.2 percent to GBP 852.4 million
  • Solid UK trading in extremely challenging market, with 4.5 percent decrease to GBP 754.0 million
  • International revenues down 10.1 percent to GBP 98.4 million, reflecting early impact of Covid-19 in China, offset by encouraging growth in the USA
• Adjusted operating profit1 down 32.3 percent to GBP 28.7 million
• Basic earnings per share of 0.9p and Adjusted earnings per share of 2.6p
• Operational net debt1 increased by 3.0 percent to GBP 367.4 million, with leverage of 2.6x
• Successful planned refinancing of core debt facilities in Q1 andsignificant liquidity available
• Dividend policy under regular review and no interim payable

Operational Highlights

• Strong start to the year in UK and US until the Covid-19 outbreak
• Continued to prioritise safety and wellbeing of all colleagues through enhanced H+S and hygiene protocols
• Rapidly adapted business operations in response to short-term changes in demand
• Decisive mitigating actions taken to lower cost base and preserve cash, including strategic restructurings in all regions
• Working closely with customers in all markets to drive growth back into categories

GBP in million (unless otherwise stated)	H1-2020	H1-2019	Change
Group revenue	880.5	923.0	(4.6%)
Like-for-like revenue[1]	852.4	899.2	(5.2%)
Adjusted operating profit[1]	28.7	42.4	(32.3%)
Adjusted operating profit margin[1]	3.3%	4.6%	(130bps)
Operating profit	13.7	29.3	(53.2%)
Profit before tax	6.8	19.5	(65.1%)
Basic EPS	0.9p	3.0p	(2.1p)
Adjusted EPS[1]	2.6p	4.9p	(2.3p)
Free cash flow[1]	(3.3)	15.0	(18.3)
Operational net debt[1]	367.4	356.6	10.8
Interim dividend per share	0p	2p	(2p)

[1] Alternative performance measures are referred to as ‘like-for-like’, ‘adjusted’, ‘underlying’ and are applied consistently throughout this news release.

Outlook

It is encouraging that the steady recovery in trading seen across the business in June has been maintained into the second half of the year.

The macroeconomic uncertainty caused by Covid-19, combined with limited clarity as to the terms and implications of the UK’s exit from the EU, means that we have to be cautious as we look ahead to the rest of this year and into 2021. However, our performance in the first half of the year has proven our ability to withstand major operational challenges and gives us confidence in the quality of our business model and strength of our customer partnerships.

We continue to be a robust business with market leading positions in each of the categories in which we operate and, as such, we are well-placed to capitalise on the long-term trend for fresh, healthy and convenient food.

Agust Gudmundsson, Chief Executive Officer, said: «The first half of this year has been extremely challenging, but I am pleased to report that the Group has produced a solid performance given the Covid-19 issues the business has faced. The scale and strength of our operations, coupled with our ability to react at speed, has proved a clear advantage to our customers during this period.

«But more than this, our performance is testament to the hard work and commitment of everyone at Bakkavor. In difficult circumstances, we have worked tirelessly to minimise disruption and continue to deliver for our customers. We are fortunate to have such dedicated colleagues and their health, safety and wellbeing continues to be our foremost priority. I am hugely grateful for their support.

«We have taken many difficult yet necessary decisions this year to protect the long-term success of our business. Whilst there will be further challenges ahead, we remain a robust, balanced and well capitalised Group and the steps we have already taken to protect our business, combined with the recent improvement in trading, gives us confidence for the future.»