Bakkavor FY profits slump amid soaring costs, inflation
Fresh food company Bakkavor warned of a tough year ahead as 2022 profits slumped by 78% due to inflation, higher costs and changing consumer habits amid the cost of living crisis.
Food Producers & Processors
The company on Wednesday said pre-tax profit fell to £18m, despite a 10.6% rise in like-for-like revenue to £2.06bn due to price rises and higher US volumes. It also announced the closure of two UK sites in an effort to cut soaring costs.
Total reported revenues jumped 14.3% to £2.1bn after the benefit of the additional week to the fiscal year and foreign exchange translations were included.
Volumes in the UK were broadly flat year on year, but the prepared food group, which supplies all the big supermarkets, gained market share to offset the soft underlying demand.
“We have seen significant inflationary pressures across our cost base and on household budgets, which in turn have driven changes in consumer behaviour. We have also had to contend with supply chain disruption as global events continue to cause instability which, combined with a tight labour market, has created a difficult trading environment.”
Bakkavor said it expected the “challenging” trading environment to continue into the coming year, as consumers are impacted by the cost-of-living crisis. Inflation across the cost base is also expected to persist, particularly in energy and labour, and the firm forecast an increase in costs of around 6 - 8% in 2023.
Reporting by Frank Prenesti for Sharecast.com