EUR 203.58 For Business Accounts Only

Boparan 4Q16/17 - Disappointing results with massive EBITDA drop on cost inflation

Boparan, the largest poultry producer in the UK, has released very disappointing results for its 4Q16/17 ended 29 July 2017. Similar to Q3, the sales trend was positive with 3.5% yoy LFL growth in Q4, with volumes contributing 2% while price increases added 1.5%. However, this was not enough to offset continued commodity cost inflation (about half of the £23m gross impact was recovered - mostly in poultry but not in fish, beef, or mozzarella), and new one-off impacts, which dramatically hit margins in all product divisions. As a result, LFL EBITDA fell by 27% yoy to £38m (EBITDA margin: -200 bps to 4.7%). We had anticipated a broadly stable number based on management’s comments from the previous call, when it was suggested that price increases, sound volume growth, and some cost reductions would be sufficient to support profitability.