Bakkavor cuts losses to £11.8m through restructuring and promotions
ICELANDIC food group Bakkavor, which employs around 1,500 people in the North West, has narrowed its losses over the past year by £142.4m to £11.8m.
The group – which is one of the largest food producers in the UK employing a total of 14,000 staff – sells more than three billion ready meals and other produce directly to retailers including Asda, Marks and Spencer and Tesco.
Its Wigan-based Hitchen Foods business employs 1,038, while New Primebake in Crewe and Nantwich has 458 staff and Melrow Salads in Merseyside employs eight staff.
The company’s annual results for last year show that one of the reasons why it narrowed its losses from £154.2m in 2008 was because of its operational restructuring programme including the sale of its Internal Produce division.
Bakkavor has two core divisions within the UK. Its ‘fresh prepared foods’ sales accounted for 89% of is UK turnover last year and includes such categories such as ready meals, desserts, leafy salads, convenience salads, pizzas, dips, prepared fruit and soups.
Its ‘fresh produce’ sales accounted for 11% of our UK turnover in 2009 and includes categories such as tomatoes, cucumbers and peppers as well as exotic and speciality vegetables.
Bakkavor’s total UK sales represented 84% of the group’s total turnover for 2009 and amounted to £1.387bn. It had total sales of £1.65bn which were up from £1.618bn last time.
Chief executive Ágúst Gudmundsson said: “Our 2009 results demonstrate a strong improvement in profit delivery, good sales growth in our key UK fresh prepared foods business and a return to significant cash generation.
“After two years of considerable effort to return the business to more expected performance levels we are very optimistic about our future prospects.
“I am also pleased to report that the group has now been fully refinanced following an agreement with the lenders to the Icelandic holding company.
“Throughout 2009, as a result of the economic recession, consumers continued to adopt a cautious approach to grocery spending and economised by taking advantage of the increasing number of promotional offers, price reductions and value ranges the retailers put in place to retain and attract shoppers.
“Within the fresh prepared food markets in which we operate in the UK, for example, over a third of the three billion packs sold were on promotion during 2009.
“Our volume sales benefited from the development of private label ranges for our customers and extensive promotional activity across our product portfolio.
“However, the increased promotional costs incurred impacted the group’s profit margins. Whilst price and value for money remain a key focus in consumer product choice we expect this trend to continue.”
Bakkavor also has international operations – with 57 facilities in 10 countries – and supplies 7 of the top 10 global grocery retailers.
