Kitwave reports decent growth as it integrates acquisitions

(Sharecast News) - Kitwave Group reported a 20% rise in revenue in its full-year results on Tuesday, to £602.2m, compared to £503.1m in the prior year. The AIM-traded firm said its gross profit margin for the 12 months ended 31 October also saw improvement, rising to 22% from 20% in the 2022 period.

Adjusted operating profit spiked 49% to £32m, marking a substantial increase from £21.5m in the preceding year.

Profit before tax followed suit, escalating 40% to £24.9m from £17.8m.

Additionally, the company generated £30.3m in net cash from operations, although pre-tax operating cash conversion decreased slightly to 90% from 105% in 2022.

The board proposed a final dividend of 7.45p per share, subject to approval at the upcoming annual general meeting on 22 March.

If ratified, that would bring the total dividend for the financial year to 11.2p per share.

Operationally, Kitwave said the acquisition of Westcountry Food Holdings in December 2022 - a specialised fresh produce wholesaler - had been seamlessly integrated into the foodservice division, performing in line with expectations.

Moreover, the company had embarked on the construction of an 80,000 square foot distribution centre to consolidate its south west operations, with completion slated for autumn 2024.

It said the expansion of the online trading platform across all divisions was intended to bolster customer relationships and operational synergy within the group.

Looking beyond the reporting period, Kitwave announced significant leadership changes, with chief executive officer Paul Young set to retire and step down from the board after the upcoming AGM in Marc.

Ben Maxted, the current chief operating officer, was slated to assume the role of CEO.

Additionally, Kitwave said it had finalised the acquisition of WLG Holdings, trading as Wilds of Oldham, a family-run drinks wholesaler, which was incorporated into its existing foodservice on-trade business HB Clark after the end of the financial year in November.

"As announced in the group's trading update in November, the strong performance continues to deliver growth with sustained momentum achieved throughout the 2023 financial year," said chief executive officer Paul Young.

"We are, therefore, able to report results in line with the significantly upgraded market expectations that were established after the group's interim results, published in July.

"As can be seen from the results for this year, all our divisions have continued to grow while managing well the inflationary pressures in their cost base that existed throughout the year."

Young said the launch of a web-based trading platform in February 2022 had brought immediate success, with electronic ordering becoming the primary source of order capture for the group at 47% of all orders in the quarter to October.

"We recognise the importance of technology and will continue to invest to improve our operational capability.

"The group is strategically positioned to continue to deliver a high service offering within the UK wholesale market, and we are confident of another positive trading period in 2024."

At 1200 GMT, shares in Kitwave Group were down 3.28% at 295p.

Reporting by Josh White for Sharecast.com.