Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • Bakkavor reports H1 2025 adjusted operating profit of £61.5m, up 9.8%, with margin improvement to 5.7%.

  • Successful £51m exit from China completed in July 2025, strengthening balance sheet and leverage position.

  • FY25 guidance upgraded, with adjusted operating profit expected towards the upper end of £120m–£126m range.

Bakkavor Group plc (LSE:BAKK), a leading international provider of fresh prepared food, has reported its unaudited results for the 26-week period ended 28 June 2025, showing improved profitability, margin expansion, and upgraded full-year guidance.

For the first half of 2025, reported revenue from continuing operations (UK and US) increased 0.9% to £1,076.3m compared with £1,066.8m in H1 2024. On a like-for-like (LFL) basis, revenue rose by 1.2% to £1,079.3m, driven by strong US volume growth of 7.6% and price increases of 2.4% in the UK. The UK site closure in Wigan led to a 2.0% volume decline, while inflationary pressures added £34.2m in costs, of which £30.8m related to the UK market.

Adjusted operating profit rose 9.8% year-on-year to £61.5m (H1 2024: £56.0m), supported by US volume growth and efficiency gains in both core markets. The adjusted operating margin increased by 50 basis points to 5.7% (H1 2024: 5.2%).

Operating profit from continuing operations came in at £37.5m, down from £55.4m a year earlier, reflecting £24.0m in exceptional costs. These included transaction costs related to the Greencore acquisition, closure expenses for the Jessup site in the US, and investment in the UK ERP replacement project.

Return on invested capital (ROIC) increased by 190 basis points to 11.2%, reflecting improved returns across the Group. Profit before tax stood at £24.6m (H1 2024: £41.8m) after net finance costs of £12.6m.

Bakkavor also completed the strategic exit from China in July 2025, securing £51m in proceeds. This has been presented as a discontinued operation in the half-year results. The sale increased the Group’s financial flexibility, reducing leverage to 1.1x as of 28 June 2025, down from 1.2x a year earlier. Including the China proceeds, leverage would reduce further by 0.3x, placing the Group at the lower end of its target range of 1.0x–2.0x.

Guidance and Outlook

The Group upgraded its FY25 guidance, with adjusted operating profit for continuing operations now expected towards the upper end of the previously guided range of £120m–£126m. Revenue is projected to remain broadly in line with FY24, as UK growth and pricing are expected to be offset by the annualisation of the Wigan site closure. In the US, underlying growth remains positive, with innovation driving progress, though some legacy business is being exited.

Inflationary costs are expected to total approximately £65m in FY25, up from the earlier estimate of £50m. Labour costs, driven by higher National Insurance contributions and the National Living Wage, represent a significant portion of this increase. Management stated that recovery of inflationary impacts is well supported by customers and underpinned by ongoing cost efficiencies.

Looking further ahead, Bakkavor now expects to achieve its medium-term target of a 6% adjusted operating profit margin in FY26, one year earlier than previously planned.

Greencore Acquisition

The recommended acquisition of Bakkavor by Greencore Group plc, announced in May 2025, was approved by shareholders in both companies in July. Regulatory approvals are underway, with the UK Competition and Markets Authority (CMA) having launched its Phase 1 merger inquiry on 1 September 2025. A decision is expected by 27 October 2025.