Bakkavor Group (BAKK) H2 2024 earnings summary

Executive summary

• Achieved strong financial performance in 2024, exceeding market expectations with significant improvements in margin, leverage, and return on invested capital, and all regions contributing to growth.

• Strategy execution remains on track, driving margin expansion and enhanced returns, with a clear path to the 6% margin target by 2027 and continued focus on operational efficiency, innovation, and ESG priorities.

• Balance sheet strength and refinancing underpin ability to enhance future returns.

• Positive momentum continues into 2025, with volume growth in all regions and reaffirmed guidance in line with market expectations.

Financial highlights

• Like-for-like revenues up 5.1% year-over-year, with all three regions showing volume growth; reported revenue rose 4.0% to £2,292.7m.

• Adjusted operating profit increased 20.5% to £113.6m; margin up 70bps to 5.0%.

• Adjusted EPS up 39.8% to 12.3p; basic EPS up 2.1% to 9.6p.

• Free cash flow of £88.7m; operational net debt reduced to £193.8m (leverage 1.1x), a 0.5x year-on-year improvement.

• ROIC improved 260bps to 10.1%; total dividend per share up 10% to 8.00p.

Outlook and guidance

• FY25 adjusted operating profit expected in line with consensus (£118.6m, range £114.0m–£123.1m); revenue growth expected broadly in line with FY24.

• Confident in achieving 6% adjusted operating margin by FY27.

• Capital expenditure to return to normal levels (~£70m), including £7m for UK ERP transformation.

• Progressive dividend policy maintained, targeting c.5% annual growth.