In This Article:
-
Margin Improvement: 70-basis point improvement to 5%.
-
Leverage: Reduced to 1.1 times, a 0.4 turn reduction.
-
Return on Invested Capital (ROIC): Increased to over 10%.
-
Revenue Growth: Like-for-like revenues up 5.1%.
-
Adjusted Operating Profit: Increased by GBP19.3 million, a 20.5% YoY increase.
-
UK Revenue: Up 5.2%, with volume up 2.8%.
-
U.S. Revenue: Up 2%, driven by volume.
-
China Revenue: Up 11.3%, driven by volume growth in mainland China.
-
Inflation Impact: GBP59 million increase in costs, primarily labor.
-
Efficiency Improvements: GBP15 million contribution to profit improvement.
-
Dividend Increase: 10% increase in the final dividend, total dividend per share of 8 pence.
-
Debt Reduction: GBP36 million reduction, leverage down to 1.1 times.
-
Capital Spend: Returned to more normal levels, including GBP3 million for ERP system replacement.
-
Finance Costs: Expected to reduce slightly with lower debt levels.
-
Effective Tax Rate: Expected to be marginally above the UK corporation tax rate at 26%.
Release Date: March 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Bakkavor Group PLC (LSE:BAKK) reported a strong financial performance in 2024, with a 70-basis point improvement in margin, reaching 5%.
-
The company achieved a significant reduction in leverage, now at 1.1 times, indicating improved financial stability.
-
Return on invested capital increased to over 10%, demonstrating effective use of capital and strategic investments.
-
The U.S. operations showed marked improvement, with EBITDA margins now ahead of the UK, indicating successful operational efficiencies.
-
Bakkavor Group PLC (LSE:BAKK) is confident in achieving its 6% margin target by 2027, supported by clear strategic plans and operational improvements.
Negative Points
-
The company faces ongoing challenges with cost price inflation, particularly in labor, which is expected to impact 2025 with an additional GBP50 million in costs.
-
Closure of the Wigan site will incur short-term costs, although it is expected to benefit margins in the second half of the year.
-
The China business, while streamlined, is not expected to deliver significant profitability, with break-even at EBIT being the best-case scenario.
-
Employee turnover, although improved, remains a concern, particularly in the U.S., where past high turnover rates impacted operational efficiency.
-
The company experienced an increase in net carbon emissions due to an incident at a U.S. factory, although it is not expected to be a recurring issue.