Bakkavor Reports Strong 2024 Results, But Faces Headwinds in 2025
Why we think this is neutral
While Bakkavor delivered strong financial results for 2024, including a 20.5% increase in adjusted operating profit and improved margins, there are several factors that temper the outlook. The company faces economic uncertainties and challenging market conditions going forward. Revenue growth is expected to slow, with FY25 revenue projected to be broadly in line with FY24. Additionally, the company is grappling with inflationary pressures and increased costs due to changes in National Insurance and National Living Wage. These headwinds, combined with the expectation of FY25 adjusted operating profit to be merely in line with market expectations, suggest a cautious outlook despite the positive 2024 performance.
Key Points
- Like-for-like revenue up 5.1% to £2,300.9m in 2024
- Adjusted operating profit increased 20.5% to £113.6m
- Adjusted operating profit margin improved by 70 basis points to 5.0%
- Net debt reduced by £35.8m, with leverage ratio improved to 1.1x
- FY25 revenue expected to be broadly in line with FY24
- FY25 adjusted operating profit anticipated to be in line with market expectations
- Facing challenges from inflation and increased labor costs
- Confident in delivering 6% margin target in FY27
Summary
Bakkavor Group plc reported strong financial results for 2024, with like-for-like revenue up 5.1% to £2,300.9m and adjusted operating profit increasing by 20.5% to £113.6m. The company also improved its adjusted operating profit margin by 70 basis points to 5.0%. However, the outlook for 2025 is more cautious, with revenue expected to be broadly in line with 2024 and adjusted operating profit anticipated to be in line with market expectations. The company faces challenges from inflation, increased costs due to National Insurance and National Living Wage changes, and economic uncertainties. Bakkavor has strengthened its balance sheet, reducing net debt by £35.8m and improving its leverage ratio to 1.1x. The company remains confident in delivering its 6% margin target in FY27 despite the near-term headwinds.