Prepared foods manufacturer Bakkavor Group saw its UK like-for-like revenues fall 19% in April and 13% in May, as demand for 'food to go' products dropped significantly.
The company said that its salads and and food to go businesses reported 'significantly lower volumes' year-on-year, however its prepared meals, pizza, bread and desserts products have seen a steady improvement in performance.
'Exceptional' Response
In a trading update, published ahead of its AGM later today, Bakkavor said that its employees, supply chain and infrastructure have 'responded exceptionally well' to the coronavirus pandemic, its China business was 'severely impacted' at the start of the year, with a 'sharp reduction' in sales volumes following in the UK and US as the Spring progressed.
It added that sales volumes across all three regions are showing signs of stabilisation, and tentative signs of recovery, with group like-for-like revenue for the five months to the end of May down around 5% compared to the same period last year.
In its core UK market, the group said that while 'significant uncertainty' remains around trading levels for the second half of the year, it is seeing a steady increase in demand for fresh convenient food, albeit from a lower base.
In the US, it said that it has taken 'appropriate actions' to adjust capacity in line with lower product demand, while in China, it said that the external environment has 'improved' in recent weeks, with the foodservice business also getting back on track.
Financial Position
Bakkavor said that it has taken 'a number of prompt and decisive actions' in recent months to lower its cost base and preserve cash, as well as adjusting capacity across individual sites in response to current and anticipated demand.
It said that it is continuing to operate 'with significant headroom' against available facilities of £562.5 million (€626.9 million) and will not be accessing government-supported debt funding as a result.
It will announce its interim results for the year on 8 September next.
Encouraging Signs
“In the UK, consumer behaviours continue to adjust, and while it will take time for sales to return, I have been encouraged by the recent increase in volumes," commented Agust Gudmundsson, chief executive. "Current events have also reinforced my confidence in the vital role we play in partnering with our customers to deliver the fresh, healthy and convenient food that consumers look for every day.
“We are a robust, balanced and well capitalised Group and the steps we are taking to protect our business, combined with the current improvement in trading, gives us every confidence for the future.”
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
