Profits plunge at food giant despite success of Newark site

Freshly prepared food business Bakkavor has seen its profits take a major hit despite strengthening its position in the desserts market thanks to the success of its Newark facility.

The listed company, which has various sites across the East Midlands, says its pre-tax profits for the full year are down 43.8 per cent to £43.8 million thanks to a combination of labour inflation and low consumer confidence. The slump is more extensive after tax, with profits plummeting from £67.2 million to £36.9 million.

Worryingly, Bakkavor also says the coronavirus outbreak has impacted its operations in China – a market it views as “highly attractive” – in the last few weeks. However, despite this, the firm told the London Stock Exchange that “market fundamentals are strong and we remain excited about our prospects in China.”

Bakkavor CEO Agust Gudmundsson appeared keen to put a positive spin on the company’s performance.

He said: “This was another solid year for Bakkavor, in which we delivered further growth, increased market share, and strengthened our operations both in the UK and internationally, whilst reporting performance in line with expectations.

“In the UK, against difficult market conditions, and with further labour inflation and low consumer confidence, we successfully protected EBITDA margins and held our underlying profitability. We have significantly strengthened our market-leading position in the desserts category and launched a major new meals range for one of our strategic customers which give us confidence going into 2020.

“Looking further ahead, we have strong foundations and the skills and expertise in place to deliver on our long-term strategy. We are confident that the strength of our business model, customer strategy and category excellence will enable us to capitalise on further growth opportunities.”