Wholesaler group Kitwave says it has enjoyed robust summer trading but cautioned of an additional £2m costs emerging from last month's Budget.
The North Shields-based group said that in an otherwise excellent year of trading, the Government's decision to reduce the national insurance threshold and the rise in the employers' national insurance rate to 15% would grow its cost base. The growing group said it hopes to offset the additional sums through efficiencies and other savings in the current financial year.
In a pre-close trading update to investors on the London Stock Exchange, Kitwave said it had been another successful year for its "buy and build strategy", which has seen it make acquisitions in the North West and South West. Bosses highlighted the purchases of drinks specialist Wilds of Oldham and the £60m acquisition, rising to £70m contingent on performance over the next two years, of Gloucestershire-based Creed Catering Supplies.
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Shareholders of the group and new investors backed the latter deal, providing £31.5m in an oversubscribed share placing of 10.1m shares.
Last month Kitwave opened a new 80,000 sqft foodservice distribution centre to the south of Exeter, which it said would help group its capacity to supply customers in the region. It also pointed to synergies the South West warehousing operation would have with Cornish firm Westcountry Food Holdings Limited, which it acquired in 2022, and Devon-based M.J. Baker Foodservice Limited, which it bought in the same year.
Ben Maxted, chief executive officer of Kitwave, said: "I am delighted that Kitwave continues to make significant financial and operational progress. We are particularly pleased to have completed three acquisitions in the period, taking our total to 15 acquisitions since 2011. The trade from Wilds of Oldham and Total Foodservice Solutions has now been integrated into the group in line with plans, whilst we expect both trade and operational efficiencies from the Creed acquisition to start to be realised in FY 2025.
"We also made some key strategic decisions to improve operational efficiencies in the period, including investment in the new Foodservice distribution centre in the South West and our voice-picking technology at the Northern ambient hub. The management team believes that these investments will help to support organic growth and enhance our customer service.
"Our platform for growth remains strong, with our network now at 37 depots. The group looks forward to reporting its FY 2024 financial results in March 2025, which are expected to be in line with market forecasts, and also providing an update on the early progress made in 2025."
Earlier this year Kitwave reported that wet weather had hampered first half trading as it subdued footfall to key restaurant and retail customers. More recently it said it was pleased with summer trading - traditionally its busiest time - and that sales to the end of October were as expected.