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Bakkavor Sees Record Revenue Growth As Lockdown Restrictions Ease

Published on Jul 21 2021 11:11 AM in A-Brands tagged: UK / China / USA / trading update / Bakkavor Group / Convenience Food

Bakkavor Sees Record Revenue Growth As Lockdown Restrictions Ease

Fresh prepared food supplier Bakkavor saw strong sales momentum in the second quarter as COVID-19 restrictions eased.

In a trading update, the company added that it delivered growth on the comparative period in 2020, which was heavily impacted by lockdown measures, and on the equivalent period in 2019.

Bakkavor Group will publish its half-year results on 8 September 2021.

Revenue Growth

The group reported revenue growth of 13.0% compared to the second quarter of 2020, and a 16.1% increase on a like-for-like basis.

Revenue increased by 0.7% (+1.8% on a like-for-like basis) compared to the second quarter of 2019.

Overall, group revenue for the first half increased 4.0% compared to the first half of 2020.

In the UK, sales in the first quarter were adversely impacted by lockdown restrictions, but early signs of recovery became apparent in March as government restrictions began to ease, it said. 

The group witnessed an improvement in sales gather pace throughout the second quarter as lockdown measures were eased further, and the frequency of shopping visits returned to pre-COVID-19 levels.

As a result of more normalised shopping habits, sales of meals, pizza and bread, and desserts returned to pre-pandemic levels.

Salads delivered a strong year-on-year performance driven by recovery in the food-to-go sector. However, this segment remained below 2019 levels due to the continuation of government guidance to work from home and mixed weather during the quarter.

UK like-for-like sales increased 12.0% in the quarter compared to last year. However, it declined by 1.4% compared to the same period in 2019.

Divisional Performance

In the US, the company saw strong sales momentum driven by the easing of restrictions and growth in traditional grocery retail and online channels.

Like-for-like sales increased 48.7% in the quarter compared to the same period in 2020, when the business was most impacted by the pandemic, and 50.3% ahead of 2019.

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The company expects demand for freshly prepared meal solutions to grow significantly and plans to increase capacity across its operations in the second half of the year.

In China, Bakkavor experienced significant like-for-like sales growth of 40.8% during the quarter.

The performance was driven by a steady recovery in its foodservice customers in mainland China, good momentum in the bakery business, and a return to growth in Hong Kong, following a challenging first quarter.

Bakkavor transitioned its business to a new replacement site in Wuhan in April. A new site in Xi'an will be operational by the end of the year, as it builds capacity to meet strong market demand for convenient food.

Operations Update

The group said that its focus remains on labour recruitment, retention and planning, to ensure efficient production to meet increasing demands.

The group is also seeing some inflation in raw materials and is working closely with customers to mitigate this impact.

Regarding Brexit, the group said the effect on its business and the supply chain has been minimal in the period as a result of its ongoing mitigation plans.

Agust Gudmundsson, CEO of Bakkavor, commented, "We are pleased to see improving trends across all of our businesses as lockdown measures have eased, with group sales for the quarter ahead of 2019. We are also encouraged by the return to pre-pandemic levels of shopping visit frequency, a key driver for our fresh prepared food offering. 

"Looking ahead, industry-wide cost pressures and labour challenges are expected to persist and we will continue to work hard across the group to attract, recruit and retain talent, and with our customers, to mitigate the impact. Overall trading remains in line with management expectations."

© 2021 European Supermarket Magazine. Article by Conor Farrelly. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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