Kitwave LON:KITW, the Northumberland-based wholesaler, published its full-year results to the end-October yesterday (4th March). The company delivered another strong year of performance, reflecting its strategic growth initiatives and resilience in the wholesale sector.
The AIM-listed wholesaler reported revenue of £663.7m, marking a 10.2% increase from the previous year. Adjusted operating profit rose by 6.3% to £34m and net cash was up from £30.3m to £31.4m. However, given increased financing costs, money spent on acquisitions, share-related payments and internal investment, pre-tax profit fell from £24.8m in 2023 to £22.5m
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Kitwave has been investing in the growth of the business in 2024, spending on its IT Infrastructure, vehicle fleet and warehousing as well as completing three acquisitions, which added £13.1m of revenue on a like-for-like basis. Kitwave bought Wilds of Oldham in November 2023, Total Foodservice in March 2024 and Creed in September 2024 for total expense of £2.2m. However, David Brind, Kitwave’s chief financial officer did note that the ‘impulse item’ wholesaler did experience slower trading conditions.
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Although not a household name, Kitwave is a significant supplier to small retail outlets and corner stores across the UK and overseas. On just the Impulse Items segment, according to market research agency Nielsen, treating and snacking in the UK market is worth £13.3bn. Within this, confectionery is worth £5.5bn and driving growth. Much of this product appears in the ‘till aisle’ of small convenience stores to tempt shoppers to grab a snack while waiting in the queue to pay for their main items.
Although Kitwave does not release specific figures on the market, some analysts estimate that the company has a market share of around 10% of the chewing gum/penny sweets/chocolate bar till aisle market.
Kitwave’s Foodservice revenues are up 25%
The best performing department was Foodservice, which saw revenues increase £45m to £223.6m a 25.5% increase year-on-year. However, its Grocery and Foodservice divisions were still affected by supply chain challenges, but Brind said that price inflation eased marginally over the year.
Inflation was still an issue though said Brind, chipping away at Kitwave’s cost base, but he said that, overall distribution costs as a proportion of revenues only rose slightly.
The company – like many – is still being affected by higher interest rates with net finance costs of £6.3m, up from £4.5m the year before. The company used £4m of its revolving credit facility and had £2.2m interest charges on leased assets.
Basic earnings per share fell 3.6p y-o-y to 23.5p, however with one-off acquisition costs, internal investment and share-related expenditure stripped out, adjusted EPS was 30p.
Kitwave’s directors recommended a final dividend of 7.45p per share, the same as in 2023 resulting in a total dividend for the year of 11.3p/share. This is a 1% rise in the dividend per share compared to FY23.
The company’s shares opened yesterday at 278.2p, down 12.5% over one-year, but up 4.5% over two-years, the company has a market cap of £222.8m.
Kitwave continues to expand its footprint
Despite headwinds from inflation, supply chain challenges, and higher finance costs, Kitwave continues to expand its footprint through acquisitions and infrastructure investments. The company’s resilience in the wholesale market, particularly its growth in the Foodservice division, underscores its strategic direction. While short-term cost pressures have impacted profitability, Kitwave’s continued investments in technology, logistics, and expansion position it well for long-term growth. Investors will be watching closely to see how the company navigates the evolving economic landscape and capitalises on market opportunities in the coming year.
