The Kitwave Group’s operating profit is down to £10.8m for the six months ending 30 April compared to £11.7m for the same period in 2023, with the company putting this down to investment and lower levels of demand in the group’s foodservice hospitality customer base.
Consolidated gross margin and adjusted EBITDA have also both slightly dropped to 21.5% (21.6% in 2023) and £15.9m (£16.0m in H1 2023) respectively. However, revenues have increased by 8% to £297m.
The company continues to invest in its operations and is predicting operational and financial benefits being realised for the rest of the year. It is also continuing its strategy of potential future acquisitions, with Ben Maxted, chief executive confirming that Kitwave sees the UK wholesale market as highly fragmented, which presents opportunities for the group to pursue purchases of other wholesalers.
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He also confirmed the construction of the group’s new 80,000 sq. ft distribution site in the Southwest is nearing completion and is expected to be operational in Q3 2024. The new depot will enable the Group to consolidate three sites into one and will further integrate WestCountry and M.J. Baker. The site will offer a full Kitwave-wide product offering with a complete foodservice range, ice cream, fresh produce, and on-trade to the customer base.
Maxted said: “The Group has made positive progress towards its strategic targets during H1 2024 with a series of important investments that will benefit the Group in the long term. The continuation of our acquisition strategy saw Wilds and Total Foodservice brought into the Group, growing our presence in the Foodservice sector in the North. Their integration into the Group has gone well and workstreams to further integrate the enlarged Northern Foodservice operation have commenced.
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“The construction of our new Foodservice distribution site in the Southwest is close to completion, which will both add capacity and further efficiencies as we consolidate three existing depots. Ahead of the completion of the new site, WestCountry has successfully migrated onto the Group’s ERP system to enable a smooth integration of the businesses.
“As noted in the pre-close trading update, operating profit for H1 2024 is slightly behind the prior year due to investment and lower levels of demand in the Group’s Foodservice hospitality customer base. This, alongside the benefits of the increased investment in infrastructure and the inclusion of trade from Total Foodservice in H2 2024 will lead to the Company’s annual financial performance having an increased second-half weighting. Despite the slight shortfall in operating profit in H1 2024 and the continued wet weather in May and early June, we expect to be in line with market expectations for the full year ending 31 October 2024,” he added.
