Bakkavör Group Struggles in “Challenging Conditions”

The Group's profitability in the quarter continued to be affected by its withdrawal from a proportion of its ready meals business in the second half of 2007 and subsequent restructuring, as well as steep increases in raw material and utility costs.

31/10/08 The Bakkavör Group has reported EBITDA of £87.9 million in the first nine months of the year. Turnover of £1.2 billion in 9M was reported, up 10% and £402.8 million in Q3, up 7%. However, EBITDA of £87.9 million in 9M was down 24%, and £29.4 million in Q3, down 26%. This included restructuring costs of £4.8 million in 9M, of which £1.7 million in Q3

Ágúst Gudmundsson, Chief Executive Officer: “Bakkavör Group is progressing in very challenging conditions as we continue to focus on our business priorities to mitigate inflationary costs, improve operational efficiencies, increase market share and drive significant cash generation. As such we are making firm groundwork towards our stated intention of returning to profit growth in 2009.”

“As expected, the Group's profitability in the quarter continued to be affected by its withdrawal from a proportion of its ready meals business in the second half of 2007 and subsequent restructuring, as well as steep increases in raw material and utility costs. The quarter was also marked by a further downturn in consumer confidence and unsettled summer weather in the UK which affected our sales performance during the period. The Group however successfully gained market share in ready meals and other core categories late in the quarter which will increase sales revenues in the remainder of the year”, he said.

Gudmundsson noted that this month the Group relinquished its 10.9% economic interest in Greencore Group. Turmoil and fluctuations in the global financial markets resulted in the withdrawal of the funding source, making it necessary for the Group to relinquish this economic interest. The withdrawal of the funding source was in no way a reflection of the financial standing of Bakkavör Group.

“Looking ahead, we expect the trading environment to remain tough for the remainder of the year and into 2009. We will continue to focus on our key business priorities in order to drive sales and profit performance and remain confident of our commitment to the fresh prepared foods sector. The Group has a diverse range of products across a wide and strong customer base as well as the ability to develop new products and ranges rapidly. Bakkavör Group remains focused on upholding and strengthening its position in the fresh prepared foods and produce markets, underpinned by its ability to successfully meet changing consumer needs,” he concluded.