Bakkavor expects slow start to 2019

Prepared food provider Bakkavör said it expects it will have to wait until the second half of 2019 before UK growth picks up, after a year when strong international performance made up for a subdued home market.

Full year results from the FTSE 250 group were solid in the UK and accelerated overseas despite the challenges from weak UK consumer confidence and higher inflation.

Group revenues for calendar 2018 were up 2.2% to £1.86bn, with like-for-like sales up 3.2%. LFL growth in the UK of 1.8%, up from 1.4% in the first half of the year but down from 5% prior year, while in the US and China LFLs increased 16%, up from 15.4% in the first half and 10% in the previous year.

Adjusted earnings before interest, tax, depreciation and amortisation were just above flat at £153.5m as the EBITDA margin was squeezed to 8.3% from 8.4% a year before. Adjusted earnings per share rose 10.5% to 14.7p and a 4p final dividend was paid to take the full year payment to 6p.

"Subdued consumer confidence and inflationary pressures have continued into 2019," said chief executive Agust Gudmundsson, "and therefore we remain cautious and expect little improvement in underlying market conditions. Consequently, we expect limited growth in the UK and a corresponding decline in the Group's EBITDA margin in the first half of the year."

"However, in the second half, we anticipate an uplift in UK revenues as we benefit from recently secured new business. Given this additional volume, together with the actions we are taking to protect profitability, we expect a significant improvement in our trading in the second half of the year and our full year group performance to be broadly in line with 2018."