Kitwave sees profit slide despite uptick in revenue

Kitwave Group, a wholesale delivery business listed on the AIM market, has blamed falling demand at its foodservice and hospitality division for a drop in profit.

The results, the first set of figures since its founder and CEO Paul Young retired after the company floated on AIM in 2021, saw its operating profit slide to £10.8m in the six months ended April 2024, from £11.7m in same period the previous year.

The firm also pointed to its capital spending, which came in at £33m, compared with £27m the previous year, as being behind the dent in profit.

Revenue at the wholesale distributor, whose 550-strong fleet of vehicles deliver alcohol, dairy and meat and poultry, saw revenues rise eight per cent to £297m from £275m. And its gross margin remained stable at 21.5 per cent.

The reporting period included the acquisitions of 130-year-old Total Foodservice Solutions for £21m and the drinks distributor WLG Holdings (also known as Wilds), which the Kitwave said have been integrated “successfully”.

Ben Maxted, who formally took over as Kitwave’s CEO in March, said: “The Group has made positive progress towards its strategic targets during the first half of 2024 with a series of important investments that will benefit the Group in the long term.

“As noted in the pre-close trading update, operating profit for the first half of 2024 is slightly behind the prior year due to investment and lower levels of demand in the Group’s Foodservice hospitality customer base.

“This, alongside the benefits of the increased investment in infrastructure and the inclusion of trade from Total Foodservice in the second half of 2024 will lead to the Company’s annual financial performance having an increased second-half weighting.”

The firm expects to be in line with market expectations for its full year report, ending October 31.