Kitwave blames stop-start Covid reopening process for falling profit

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Kitwave Group PLC (AIM:KITW), an independent wholesaler specialising in confectionery, soft drinks and groceries, has seen its shares marked down after a trading update.


The company, which floated in May at 150p, said full year operating profit fell from GBP7.6mln to GBP0.8mln as its business was hit by COVID-19 lockdowns and closures in the leisure and hospitality sector.


Since April it said trading had returned close to pre-pandemic levels and is currently in line with market expectations.


Chief executive Paul Young said: “All of the group’s divisions have experienced some level of impact from the stop-start nature of COVID-19 restrictions during the period. Supply to pubs, restaurants and vending machine operators was severely disrupted as these businesses were either closed or operating under constraints. In contrast, our Frozen & Chilled division was extremely resilient and operated close to pre-COVID-19 levels throughout the period.


“Since mid-May 2021, COVID-19 lockdown restrictions have been eased and trade has accelerated. Thanks to a period of warmer weather and consumer interest in the Euros, we are already experiencing sales volumes that are moving toward pre-pandemic levels; this was the case even before the highly anticipated 19 July 2021 ‘Freedom Day’. As such, we remain confident that the group is on track to achieve its full year expectations.


“This belief is further supported by the timing of the return to normal, as it allows the group to take full advantage of the second half of our financial year, when trading is traditionally stronger due to the seasonality of the Frozen & Chilled division.”


In the market however, the company’s shares lost 5.9% to 162.55p – though still above the flotation price.

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