Bakery business Hovis has forecast the end of price volatility as its profits dropped by £28m last year, due to surging supply chain and ingredients costs continued to squeeze its margins.
The 137-year-old bread-maker recently posted a pre-tax loss of £28.6m in the nine months to the end of September 2022, compared with a £20.2m profit in the year to December 2021.
According to The Times, sales were £309.8m during the period, down from £367.9m the year before, and its gross margins reduced from 22.8% to 16.8%.
The drop in revenue came despite Hovis-branded bread sales rising by £12.2m to £284.7m.
The iconic British bread company enjoyed a surge in sales during the pandemic, as shoppers stocked up on groceries while spending more time at home.
Since then, the bread market has been impacted by cost pressures due to the rising price of wheat after Russia launched its invasion of Ukraine in February last year.
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However, Hovis expects cost pressures to ease over the next year and bread prices to stabilise for the 2023 financial year.
A Hovis spokesperson said: “Significant cost inflation has had an impact on profitability in the nine months period ending September 2022 as we worked hard to minimise the impact on consumers and customers during a year of unprecedented price volatility.
“Having managed through exceptional commodity inflation, we expect bread pricing to stabilise for FY23 and beyond.
“As we close the full year to end September 2023, we are confident that we will be able to report a return to strong profitability and with materially improved EBITDA performance.
“The business is well funded with strong shareholder support and under our strengthened leadership team the business is looking forward to deliver sustainable growth for the years to come,” they said.
The news comes as Waitrose’s parent company, the John Lewis Partnership, has appointed former Hovis CEO Nish Kankiwala as its new chief executive.
