Bakkavor Group (BAKK) H1 2024 earnings summary

Executive summary

• Delivered strong H1 2024 results with EBIT of £55 million, up 27% year-over-year, and margin improvement to 4.9%, supported by robust performance across all regions and upgraded full-year outlook.

• Like-for-like revenues grew 3.8%, driven by both price (2.1%) and volume (1.7%) growth, with positive volume growth returning across all regions.

• Enhanced shareholder returns through a 10% increase to the interim dividend and continued debt reduction.

• Strategic progress includes margin improvement, simplification of China operations, and restored profitability in the US.

• Change in executive leadership announced, with a new CFO to be appointed from November 2024.

Financial highlights

• Reported revenue rose 2.8% year-over-year to £1,121.2m; like-for-like revenue up 3.8%.

• Adjusted operating profit increased 26.7% to £55.0m; EBIT margin improved 90bps to 4.9%.

• Basic EPS up 38.6% to 6.1p; adjusted EPS up 41% to 5.5p.

• Free cash flow increased to £53.2m, supporting further debt reduction; leverage reduced to 1.2x.

• Interim dividend per share increased 10% to 3.20p.

Outlook and guidance

• Upgraded full-year profit guidance to £108-112 million, above consensus, with revenue growth expected at 2-3% for the year.

• Medium-term EBIT margin target set at 6% within three years, driven by operational efficiency and strategic focus.

• Effective tax rate for 2024 guided at 24% due to additional tax losses; expected to revert to 26% in 2025.

• Capital spend guidance revised to £50-60 million, including ERP project; further net debt reduction and leverage improvement expected.

• Restructuring savings ahead of plan, with c.£30m annualised benefit.