Ready meals giant Bakkavor's profits punctured by City float farce

The farce of reviving a float just a week after shelving it, has eaten into profits at Bakkavor, the ready meals maker admitted on Wednesday.

Bakkavor, founded by Icelandic “business Viking” brothers Lydur and Agust Gudmundsson, floated at 180p per share in November. That was shortly after it scrapped a 195p-per-share offer blaming “market volatility”.

The initial cancellation was seen as a blow for the UK’s float market, coming on the same day that telecoms masts firm Arqiva pulled its plans to go public.

Costs linked to the float, coupled with higher ingredient costs and wages, contributed to Bakkavor’s pre-tax profits falling 24.1% to £39 million last year.

The supplier to supermarkets such as Marks & Spencer and Waitrose had to raise prices in response to the higher cost of milk and butter. That led to slower UK revenue growth in the second half as customers shunned some hikes.

However, the firm still managed to boost group sales to £1.8 billion from £1.76 billion in the prior 53 weeks.

Chief executive Agust Gudmundsson called it a “strong trading performance, in a highly inflationary environment”.

Charles Hall, analyst at house broker Peel Hunt, said: “A number of commodity prices have now eased (eg dairy), albeit this is yet to be passed on to consumers. Volume growth should pick-up as inflation subsides.”

Bakkavor expects future sales growth when a £35 million expansion of its desserts factory in Newark, Nottinghamshire is completed. It has also invested in a new China site.

Shares fell 3p to 187p.