Bakkavor Group (BAKK) H2 2023 earnings summary

Executive summary

• FY23 execution delivered higher adjusted operating profit, improved cash generation and £55m debt reduction despite inflation and subdued volumes.

• H2 profit momentum and business stabilisation underpin confidence in FY24; outlook is for adjusted operating profit at least in line with the upper end of market expectations.

Financial highlights

• FY23 revenue £2,203.8m, up 3.0% YoY; like-for-like revenue £2,214.2m, up 5.3%.

• Adjusted operating profit rose 5.5% to £94.3m; adjusted margin increased 10 bps to 4.3%. Reported operating profit was £97.1m vs £37.8m.

• Free cash flow increased to £103.2m from £53.4m; operational net debt fell to £229.6m from £284.9m.

• Adjusted EPS was 8.8p vs 9.5p; basic EPS was 9.4p vs 2.2p.

Outlook and guidance

• FY24 adjusted operating profit expected at least in line with the upper end of market expectations; stated range £95m–£100m, with consensus of £97.1m and a £95.0m–£99.9m range.

• FY24 revenue planning assumes 1–2% growth and subdued volumes, with encouraging market signs; success depends on modest volume growth and continued efficiency gains.

• Interest costs expected at ~£26m; expiry of attractive swaps in early 2024 partly offset by debt reduction. Effective tax rate expected at ~26%, with lower cash tax from UK capital allowances.