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%, driven by UK volume growth, efficiency gains, and robust performance across all regions.

• Upgraded full-year profit guidance to £108–112 million, above consensus, reflecting confidence in continued momentum and improved market conditions.

• Enhanced shareholder returns through a 10% increase in 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 up 2.8% to £1,121.2m; like-for-like revenue up 3.8%, led by UK growth.

• Adjusted operating profit up 27% to £55.0m; EBIT margin improved by 90bps to 4.9%.

• Adjusted EPS up 41% to 5.5p; basic EPS up 39% to 6.1p.

• 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 FY24 adjusted operating profit guidance to £108m–£112m, above market expectations; revenue growth expected at 2–3%.

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

• Effective tax rate for 2024 revised down to 24% due to additional tax losses; expected to return to 26% in 2025.

• Capital expenditure guidance revised to £50–60 million, including ERP investment.

• UK expected to continue outperforming the market; US to return to revenue growth in H2; China to remain cash generative with reduced losses.