UK own-label manufacturer Bakkavor has booked a net loss in the first quarter of the year, hurt by raw material inflation and a “challenging” trading environment.
The company made a net loss in the three months to the end of March of GBP1.5m (US$2.4m) compared to a net profit of GBP8.1m in the prior-year period. Operating profits slid 48.6% to GBP9.4m.
Bakkavor said it continues to see raw material inflation, with the price of some key ingredients, such as meats and seafood, rising by more than 5% year-on-year.
Net sales in the period dropped 1.2% to GBP413.9m, which Bakkavor blamed on the closure of Exotic Farm Produce and English Village Salads, in addition to the disposal of Bakkavor Traiteur.
Like-for-like sales, however, grew 3.1%. Growth in the UK was driven by “successful” product launches and promotional activity, the company said, while its international business grew across all regions.
“We have continued to build on the momentum from the previous quarter with strong like-for like growth in sales helping to drive an additional GBP1.9m of Adjusted EBITDA,” said CEO Agust Gudmundsson. “Despite the challenging economic environment we have continued to strengthen relationships with our key customers and have maintained leading positions in our chosen categories.”
Looking ahead, Bakkavor warned “high levels of promotional activity continue to be necessary” in order to address underlying weak consumer demand.
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