British baker brand Hovis saw a sharp drop in revenues last year, as soaring costs hit margins despite maintaining its Covid sales.
According to newly filed accounts on Companies House, profits fell 73%, with a drop in EBITDA from £13.8 million to £3.7 million.
As a result, the company has attributed the decrease to “significant” rises in ingredients and utility costs in the second half of 2021, further caused by the”changes in the dynamics of the supermarket grocery sector and the continuation of challenges related to the Covid-19 pandemic”.
Hovis also reported an 8% rise in sales to £361.2 million compared with £360.7 million in the same period in 2020.
However, gross profit margins decreased from 27.1% to £23.2%.
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Hovis also claims that it was the only bread brand to grow its market share in the period, “despite a number of challenges impacting the industry”.
The accounts stated: “Our financial results reflect the continued program of efficiency across our supply chain. However significant increases in ingredients, labour and utilities costs led to the need for Hovis to pass inflation to customers.”
“However, Hovis is a well-funded business, with a strong balance sheet and the board is confident we have the right strategy to drive long-term sustainable growth.”
The group added that it did not expect the current difficult trading environment and inflationary pressures to improve over the medium-term.
Last month, Hovis has announced CEO Nish Kankiwala will be stepping down from the position at the end of September.
Kankiwala holds 40 years of experience in the FMCG sector, he started his career at Unilever serving in a number of commercial and operational roles, before moving to Pepsico where he became president of the soft drinks giant in Europe and Africa.
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