Key Summary
Wholesaler Kitwave Group PLC on Tuesday (July 1) reported record first half revenues and operating profits but warned of the impact of employer overheads and impacted consumer confidence.
The North Shields-based group saw unaudited revenue jump 26.7 per cent to £376.2m in the six months to the end of April, as adjusted operating profit over the same period grew nearly 22 per cent to £13.2m. Pre-tax profits slipped from £6.9m this time last year to £5.6m.
Kitwave said its retail and wholesale division had slightly outperformed expectations and said recent acquisitions had significantly boosted its nationwide footprint.
However, the wholesaler reported slump in consumer confidence, impacting leisure sector. Kitwave said the impact was noticeable in its higher margin tourism-based customers.
The group says rises in Employer National Insurance contributions, estimated to be about £1.8m this year and £2.7m next, will add to its costs from the second half, and that it no longer thinks its can offset the rises.
Combined with the pressure on the topline from the slump in foodservice consumption and continued investment in the south west of the UK, as the group transitions from three separate locations into a single 80,000 sq ft distribution centre, the additional costs led the group to lower full-year profit expectations.
Adjusted operating profit for the year is now forecast to be in the range of £38m-£40.5m, down from the £44.5m previously expected.
“This period has seen record revenue and operating profits for Kitwave, underpinned by our continued strategic transformation and supported by the acquisition of Creed Foodservice, which has proven to be an excellent addition to the group,” said CEO Ben Maxted.
He added that while short-term investments and cost pressures have led to a lowered profit outlook, the Group’s strong balance sheet and cash generation provide resilience and flexibility to pursue its buy-and-build strategy.