TIDMGNC
RNS Number : 8340M
Greencore Group PLC
26 January 2021
26 January 2021
Greencore Group plc
A resilient Q1 performance in challenging trading conditions
Greencore Group plc ("Greencore" or the "Group"), a leading
manufacturer of convenience foods in the UK, today issues a trading
update covering the 13 weeks to 25 December 2020 ("Q1" or "the
quarter").
Q1 Highlights(1,2)
-- Consistent focus on the Group's three priorities - keeping
our people safe, feeding the UK, and protecting our business
-- Group revenue down 15.0% in Q1, impacted by the reduction in
mobility arising from tiered restrictions and lockdowns in the UK
during the period
-- Positive Adjusted Operating Profit and Adjusted EBITDA for the quarter
-- Continued to execute well against growth opportunities and
secured additional new business during the quarter
-- Liquidity and balance sheet strengthened through revised debt
financing agreements and a successful equity placing raising gross
proceeds of GBP90m, protecting the business in the near term and
supporting delivery of value creating opportunities as trading
conditions recover
-- Latest lockdown significantly impacting demand in food to go
categories, though not as marked as the initial lockdown in March
2020. Currently, pro forma Group revenue is approximately 20% below
prior year levels, with performance in food to go categories down
approximately 35% on prior year while other convenience categories
remain stable
-- Continued near term trading uncertainty however, the Group is
well positioned to build back the business rapidly as trading
conditions recover
Q1 Trading (1,2)
Revenue Growth
GBPm Reported Pro forma
-------- --------- ----------
Group 312.7 -15.0% -15.1%
-------- --------- ----------
Food to go categories 188.5 -21.7% -21.7%
-------- --------- ----------
Other convenience food
categories 124.1 -2.1% -2.1%
-------- --------- ----------
Pro Forma Revenue Growth
October 2020 November 2020 December 2020
------------- -------------- --------------
Group -15% -17% -14%
------------- -------------- --------------
Food to go categories -22% -24% -20%
------------- -------------- --------------
Other convenience food
categories -2% -2% -2%
------------- -------------- --------------
Greencore's purposeful leadership and its three priorities -
keeping our people safe, feeding the UK, and protecting our
business - continued to provide a clear direction for the Group in
Q1. The organisation, supply chain and production network all
functioned well in the period, enabling the Group to maintain its
high levels of customer service and satisfaction in this
challenging operating environment.
The Group's reported revenue in Q1 was GBP312.7m, a decrease of
15.0% on the prior year, reflecting the impact of COVID-19 related
restrictions on demand in food to go categories. On a pro forma
basis, Group revenue decreased by 15.1%. The Group continued to
execute well against growth opportunities and secured additional
new business during the quarter.
In the Group's food to go categories, reported revenue was
GBP188.5m in Q1, a decrease of 21.7% on both a reported and pro
forma basis. The recovery in demand that was evident at the end of
FY20 was impeded by the tiered regional restrictions on mobility
introduced across the UK in October, and then by a subsequent
national lockdown until early December, followed by the
implementation of tiered regional lockdowns.
Reported revenue in the Group's other convenience food
categories was GBP124.1m in Q1, a decrease of 2.1% on both a
reported and pro forma basis.
During the quarter the Group continued to focus on cost and cash
flow mitigants to protect the business, including the renewed use
of furlough supports, pay freezes, elimination of discretionary
spending, and a reduction in planned capital expenditures. These
initiatives supported the delivery of positive Adjusted Operating
Profit and Adjusted EBITDA in Q1.
The Group's liquidity and balance sheet was also strengthened in
Q1. The Group secured revised debt financing facilities and
amendments on near term covenant conditions, raised gross proceeds
of GBP90m in an equity placing, and completed the sale of its
molasses businesses for cash consideration of approximately
GBP15.5m.
Outlook(1,2)
A further national lockdown was introduced on 4 January 2021
and, as a result, Group revenue is currently 20% below prior year
levels. Pro forma revenue in the Group's food to go categories is
currently running approximately 35% below prior year levels, while
performance in the Group's other convenience categories is stable
year on year. The Group will continue to proactively manage costs
and cash flow through the duration of the current lockdown, while
also preparing for recovery and growth as mobility restrictions
begin to ease.
The free trade agreement negotiated between the EU and the UK
entered into force on 1 January 2021. The operational impact has
been modest to date as the Group had completed extensive Brexit
planning and was well prepared for any near term volatility in the
supply chain.
The ongoing uncertainty regarding the duration and impact of
COVID-19 on the Group's trading environment, and in particular on
demand in its food to go categories, continues to make it difficult
to predict FY21 performance. In this context, the Group's financial
guidance remains suspended.
Greencore will report its H1 21 results on 25 May 2021.
Commenting on the performance, Patrick Coveney, Chief Executive
Officer, said:
"This has been another challenging period for Greencore, and as
ever I would like to thank all of our colleagues for the
outstanding professionalism and resilience that they are showing.
Although the difficult trading conditions are likely to persist in
the near term, we remain confident that demand for our food to go
categories will recover strongly as the effects of COVID-19 recede
and mobility restrictions are removed.
We secured a number of new business wins in the quarter and have
a healthy commercial pipeline as we look forward. In addition, the
operational, debt and equity measures that we have taken in recent
months provide us with a strong foundation from which to navigate
our way through all of the challenges of COVID-19. We are confident
that we have the capability and resources to build back the
business rapidly as soon as market conditions allow, and we are
optimistic about the medium-term prospects for Greencore."
Conference Call
A conference call for investors and analysts will be held at
8.30am on 26 January 2021. Registration and dial in details are
available at www.greencore.com/investor-relations/
For further information, please contact:
Patrick Coveney Chief Executive Officer Tel: +353 (0) 1
486 3313
Emma Hynes Chief Financial Officer Tel: +353 (0) 1
486 3307
Jack Gorman Head of Investor Relations Tel: +353 (0) 1
486 3308
Rob Greening or Sam Powerscourt Tel: +44 (0) 20
Austrums 7250 1446
Billy Murphy or Louise Drury Communications Tel: +353 (0) 1
Walsh 260 5000
(1) Pro forma references throughout this statement are on a
constant currency basis. Reported revenue in Q1 21 and Q1 20 is
adjusted to exclude the sale of the Group's molasses businesses
that was completed in Q1 21
(2) Current performance based on trading week to 15 January
2021
About Greencore
We are a leading manufacturer of convenience food in the UK and
our purpose is to make every day taste better. We supply all of the
major supermarkets in the UK. We also supply convenience and travel
retail outlets, discounters, coffee shops, foodservice and other
retailers. We have strong market positions in a range of categories
including sandwiches, salads, sushi, chilled snacking, chilled
ready meals, chilled soups and sauces, chilled quiche, ambient
sauces and pickles, and frozen Yorkshire Puddings.
In FY20 we manufactured 619m sandwiches and other food to go
products, 116m chilled prepared meals, and 264m bottles of cooking
sauces, pickles and condiments. We carry out more than 10,000
direct to store deliveries each day. We have 16 world-class
manufacturing sites in the UK, with industry-leading technology and
supply chain capabilities. We generated revenues of GBP1.3bn in
FY20 and employ approximately 12,200 people. We are headquartered
in Dublin, Ireland.
For further information go to www.greencore.com or follow
Greencore on social media.
This announcement is based on information sourced from unaudited
management accounts.
Certain statements made in this Trading Update are
forward--looking. These represent expectations for the Group's
business, and involve known and unknown risks and uncertainties,
many of which are beyond the Group's control. The Group has based
these forward--looking statements on current expectations and
projections about future events. These forward-looking statements
may generally, but not always, be identified by the use of words
such as 'will', 'aims', 'anticipates', 'continue', 'could',
'should', 'expects', 'is expected to', 'may', 'estimates',
'believes', 'intends', 'projects', 'targets', or the negative
thereof, or similar expressions.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future and reflect
the Group's current expectations and assumptions as to such future
events and circumstances that may not prove accurate. A number of
material factors could cause actual results and developments to
differ materially from those expressed or implied by
forward-looking statements. You should not place undue reliance on
any forward-looking statements. These forward-looking statements
are made as of the date of this Trading Update. The Group expressly
disclaims any obligation to publicly update or review these
forward-looking statements other than as required by law.
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END
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