Boparan's biscuit underperformance sees runway crumble

11 April 2019

Download Publications (395.23 KB)

Boparan, the UK food producer, reported 2Q19 results on 27 March 2019. The company’s performance reflected a continuation of the reduction in EBITDA margin, driven by a 690 basis points (bps) year-on-year (YoY) reduction in branded EBITDA margins to 5.8%.

Margins in the biscuit business are falling, the poultry business has lost customer contracts and Boparan is likely to use GBP 155m of the group’s GBP 189m of available cash as of 2Q19. With the business under pressure, we see fewer routes out of the current situation for Boparan, and believe the group is likely to draw its revolving credit facility (RCF) to preserve runway. In addition, we do not rule out a restructuring following the repayment of the 2019 bonds.