Shares in Bakkavor (BAKK) – a provider of fresh-prepared food – tumbled by more than a tenth following the news that “subdued consumer confidence and inflationary pressures” have spilled into 2019. Management expects “little improvement in underlying market conditions” and anticipates limited UK growth, with a fall in the cash profit margin in the first half. However, second-half UK revenues should benefit from new business wins. Thus, the full-year performance is expected to be “broadly in line” with 2018.
UK revenues rose 1.1 per cent to £1.65bn – notwithstanding a difficult backdrop. Bakkavor had previously disclosed plans to spend £35m on its Newark desserts site in the UK, and this investment is now in its final phase. The company further enhanced its pudding range via the acquisition of Haydens from Real Good Food (RGD) last September.
Meanwhile, the international business’s sales climbed 13 per cent – albeit from a far lower base. In the US, Bakkavor opened two new factories in San Antonio and Charlotte. And newly-built factory in Shanghai is in the early stages of production.
House broker Peel Hunt expects adjusted pre-tax profits of £100m and EPS of 14.6p in 2019, against £99.6m and 14.7p in 2018.
| BAKKAVOR (BAKK) | ||||
| ORD PRICE: | 142p | MARKET VALUE: | £822m | |
| TOUCH: | 140-144p | 12-MONTH HIGH: | 206p | LOW: 129p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 98p* | NET DEBT: | 54% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014** | 1.63 | 12.5 | na | na |
| 2015** | 1.67 | 47.2 | na | na |
| 2016** | 1.76 | 63.1 | na | na |
| 2017 | 1.81 | 39.0 | 5.8 | na |
| 2018 | 1.86 | 77.9 | 11.6 | 6.0 |
| % change | +2 | +100 | +100 | - |
| Ex-div: | 02 May | |||
| Payment: | 29 May | |||
| *Includes intangible assets of £653m, or 113p a share. **Pre-IPO figures taken from prospectus | ||||
