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(Sharecast News) - Kitwave tumbled on Tuesday as it posted record first-half revenue and operating profits but cut its full-year profit outlook, citing fragile consumer confidence and increased costs.
In the six months to 30 April, adjusted operating profit rose 21.9% to 13.2m on revenue of 376.2m, up 26.7% on the same period a year earlier.
The AIM-listed company said the performance was achieved despite weaker levels of demand from hospitality, which impacted the Foodservice division earlier in the period, before it then experienced an improvement in the run-up to Easter.
The retail and wholesale division slightly outperformed expectations, Kitwave said, with like-for-like revenue up 3.1%.
Chief executive Ben Maxted said: "This period has seen record revenue and operating profits for Kitwave, underpinned by our continued strategic transformation and supported by the acquisition of Creed Foodservice, which has proven to be an excellent addition to the group.
"Whilst we have navigated some operational changes, particularly the transition to a new, larger depot in the South West and the integration of multiple businesses, we are pleased with the solid progress made and the underlying strength of our group."
Looking forward, however, the company said it now expects to report FY25 adjusted operating profit of between 38m and 40.5m.
"Since the pre-close trading update, the volatility in the macroeconomic backdrop has caused a more pronounced fragility in consumer confidence which is adversely affecting volumes in the destination leisure sector," it said.
"Whilst footfall is up from the prior year, consumption is down in certain areas. This impact has been particularly visible in our higher margin tourism-based depots."
It also noted that employer National Insurance increases will push up costs in the second half of the financial year and beyond and said it no longer believes it will be able to offset these tax increases.
"The combined effect of recent lower than expected foodservice consumption, continued investment in the South West and the employer National Insurance cost increases has resulted in the directors revising their expectations for the financial performance of the group during the current financial year and beyond," it said.
At 0955 BST, the shares were down 22% at 250p.