Supermarket supplier Bakkavor sees profits fall as sales hit by commuters working from home

Supermarket supplier Bakkavor today reported 2020 revenues down 4.9% on 2019 to £1.79 billion, with a UK like-for-like sales slump of 5.2% to £1.56 billion after sales volumes were hit by commuters working from home.

The firm - which makes salads and ready meals for M&S and Tesco - said in a full year results statement that operating profits were down nearly 11% to £62 million, and announced that it will not be paying a dividend for 2020 "given COVID-19 impact throughout year".

Boss Agust Gudmundsson said that despite Boris Johnson's roadmap plans "with lockdown restrictions in the UK continuing into the spring, the short-term trading environment remains uncertain". 

But the company saw strong US growth of 12.2% to £146.5 million last year, with China revenues seeing a healthy recovery, and Gudmundsson insisted that "we are encouraged by the way consumers have returned to our fresher, healthier and more convenient foods each time these restrictions have lifted."

He said: "The actions taken in 2020 to preserve cash and protect profitability across the business, combined with the successful turnaround of our US business, and the strength of our financial position, leave the Group well placed to deliver further growth."

Bakkavor's operational net debt decreased by £21.4 million to £333.4 million. It ended the period with over £200m of headroom.

In its outlook, the firm stated that it plans to extend routes to market in China, and said: "The business is in good shape, even after the events of the past 12 months, and we look forward to building on this momentum into 2021 and beyond."

Analysts at Investec noted the company's "strong" balance sheet, and said: "The group acknowledges that with a more dynamic working pattern expected in the future, this Food to Go category is unlikely to recover to pre-pandemic levels."

Shares were down 4.4% in early trading