Wholesale group Kitwave has boosted revenues and profits on the back of acquisitions and rebounding trade after the pandemic.
The North Shields-based business said the purchase of Devon wholesaler M.J. Baker Foodservice Limited in early 2022 and a strong performance within its foodservice division - which supplies to pubs and restaurants and where revenues more than doubled - led to results in line with upgraded expectations. In its first full year of trading since listing on AIM in 2021, Kitwave posted a 32% rise in revenue to £503.1m and a rise in adjusted operating profit from £7.1m to £21.5m.
During the year to the end of October, the firm, which specialises in selling snacks, alcohol and frozen good to more than 40,000 independent businesses, opened a 60,000 sqft distribution centre in Wakefield which also serves as a head office for the group's HB Clark alcohol wholesale business. Kitwave told investors the move had created efficiencies that allowed the foodservice division to grow.
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Paul Young, CEO of Kitwave, said the group was "really comfortable" with current trading and noted the group's strong performance had continued into the first part of this year despite cost-of-living pressures.
He told BusinessLive: "When it comes to impulse products, it seems that regardless of when times are tough - and let's face times are tough for people because of inflation - people continue to buy those products because it's seen as affordable luxury. It's that feel good factor and that's been proven time and again over our 30-year history.
"And from a food service point of view, despite what you read in the press about there being this enormous pressure on discretionary spend, you still get people taking the view that they'll go out for a pint or an occasional meal. And that's where we sit as a food service business.
"Some of this, is also down to the sort of customer base that we've got. You find independents - whether it be a restaurant, a convenience store or a pub - will find a way of generating business. Take pubs as an example: under a degree of pressure, you see the amount of live entertainment being booked has increased substantially. It's about getting the customer into the venue. They are really good at it and there's a lot of respect goes to that independent sector."
In a results presentation to the London Stock Exchange, Mr Young said he was confident of another strong performance in 2023. He said: "The board recognises the significant market opportunity within the fragmented UK wholesale market and Kitwave's strategy is focused on capitalising on this. The success of our acquisitions to date has demonstrated the viability of this strategy, with the group continuing to look to identify acquisition opportunities to combine with its initiatives to drive organic growth.
"Post-year end, we completed the acquisition of Westcountry Food Holdings Limited, a specialist fresh produce wholesaler to the foodservice sector operating in the South West of England. The acquisition is in line with our criteria and will be incorporated into the existing Foodservice division."
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