Hovis has reported a significant decline in sales, with revenue dropping from £478 million in 2023 to £440 million in 2024, as indicated by its recent Companies House report. Furthermore, the bakery manufacturer experienced a rise in pre-tax losses, going from £4.8 million to £8.7 million, marking an 81% decrease during the same period. In addition, EBITDA decreased from £20.9 million to £18.7 million, driven by reduced revenue and increased distribution expenses.
Strategic Investments Amidst Market Challenges
Interestingly, despite these challenges, Hovis noted that its overall bread market share has remained stable. This is particularly noteworthy given the ongoing price inflation and cost-of-living crisis. The company emphasizes its commitment to “managing the cost base in a highly competitive market.”
To strengthen its position, Hovis invested £8.8 million into its bakeries and logistics network over the past year. The firm has also established long-term partnerships with customers. Notably, it initiated a new distribution partnership with a UK retailer, utilizing the Hovis direct-to-store network to enhance service, shorten lead times, and reduce food miles for third-party bakery goods.
Additionally, Hovis launched a new range of premium breads, including the Hovis Bloomer range, and continues to collaborate with Modern Baker to expand its SuperLoaf brand and franchise across the UK and Ireland. The Hovis Farmhouse Batch also hit the shelves and is reported to be one of the company’s most successful launches.
Potential Merger Discussions
Earlier this year, speculation arose that Associated British Foods, which owns the Kingsmill parent company Allied Bakeries, was discussing potential merger talks with Hovis owner Endless LLP. Hovis has since confirmed ongoing discussions regarding a potential merger in its latest Companies House report.
The report stated, “Following recent media speculation, a potential third party confirmed that discussions were being held with Endless LLP regarding a possible transaction. At the present time, these discussions are ongoing; no formal Sale and Purchase agreement has been signed, and the completion of any transaction is expected to be subject to UK regulatory processes.”
Furthermore, the company noted, “The Directors have considered the likelihood of whether the potential transaction will complete within the going concern period and, based on legal advice received, are of the view that a transaction is unlikely to be concluded in the going concern period.”
Importantly, Hovis added, “All diligence discussions with the potential third party have been held in the presence of Competition lawyers, and there has been no indication that there will be any changes to the current trade or structures pertaining to the Hovis Group.”
For context, Hovis was acquired by Endless LLP in 2020 after a lengthy bidding process.
