TIDMGNC
RNS Number : 5213G
Greencore Group PLC
27 July 2021
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27 July 2021
Greencore Group plc
Strong improvement in trading and cashflow momentum in Q3
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 from 26 March 2021 to 25 June 2021
("Q3" or "the quarter").
PERFORMANCE(1)
-- Strong revenue momentum in Q3 with Group pro forma revenue 53.1% above prior year levels and
only 2.8% below equivalent pre-COVID levels in Q3 19. Progressive improvement in monthly trading
with Group pro forma revenue in June 1% above comparative pre-COVID levels in FY19
-- Pro forma revenue growth in food to go categories 91.1% above prior year levels and 9.3% below
the equivalent pre-COVID levels in Q3 19
-- Positive Adjusted Operating Profit for the quarter, in line with management expectations
STRATEGIC DEVELOPMENTS
-- Strong execution on new business wins and extending customer relationships, supplementing
underlying revenue growth in Q3
-- Significant progress in driving improved cash generation and balance sheet strength, with
debt reduction, improved leverage metrics, lower annual cash contributions agreed for pension
scheme funding from FY22, and the successful refinancing of the Group's Private Placement
Notes due in October 2021
-- Good progress on the Group's sustainability objectives, in particular the launch of fully
recyclable sandwich skillet trials for customers in September 2021
OUTLOOK(2)
-- Revenue momentum has remained encouraging in the first three trading weeks of July
-- Notwithstanding the supply chain and labour challenges impacting the broader UK food industry
at present, the Group is confident in its ability to deliver strong year on year profit and
cashflow progression in the second half of the year
-- The Group now expects to generate an FY21 Adjusted Operating Profit outturn of between GBP36m
and GBP40m, versus previous guidance of above FY20 levels of GBP32.5m
-- Given strong cashflow momentum, Net Debt (excluding lease liabilities) at the end of FY21
is anticipated to be below GBP240m with Net Debt:EBITDA comfortably below 3x, as measured
under financing agreements
-- Greencore will report its FY21 results on 30 November 2021
Commenting on the performance, Patrick Coveney, Chief Executive
Officer, said:
"We are encouraged by the improvement in revenue, profitability
and cash flow momentum in Q3 and the early weeks of Q4. Against the
backdrop of the UK economy reopening fully, we are rebuilding our
economic model effectively and sustainably with all stakeholders,
supported by our long-standing customer relationships and further
enhanced by the new business wins we have secured this year. The
performance is underpinned in particular by the energy and
dedication of our people. We are also delighted to have made
progress in creating a fully recyclable sandwich skillet, a key
commitment of our sustainability strategy. We have a strong
position in the dynamic UK convenience food market and are
confident about our medium-term prospects."
Q3 Trading (1,2)
Revenue Revenue Growth (versus FY20)
GBPm Q3 9 months
-------- --------------------- ---------------------
Reported Pro forma Reported Pro forma
-------- --------- ---------- --------- ----------
Group 360.2 +49.7% +53.1% -1.7% -0.6%
-------- --------- ---------- --------- ----------
Food to go categories 236.5 +91.1% +91.1% -0.7% -0.7%
-------- --------- ---------- --------- ----------
Other convenience food
categories 123.7 +5.9% +11.1% -3.2% -0.4%
-------- --------- ---------- --------- ----------
Pro Forma Revenue Growth (versus FY20)
April 2021 May 2021 June 2021 Q3 2021 July 2021(2)
----------- --------- ---------- -------- -------------
Group +66% +60% +40% +53% +28%
----------- --------- ---------- -------- -------------
Food to go categories +129% +111% +62% +91% +42%
----------- --------- ---------- -------- -------------
Other convenience food
categories +13% +10% +10% +11% +6%
----------- --------- ---------- -------- -------------
Pro Forma Revenue Growth (versus FY19)
April 2021 May 2021 June 2021 Q3 2021 July 2021(2)
----------- --------- ---------- -------- -------------
Group -7% -4% +1% -3% -2%
----------- --------- ---------- -------- -------------
Food to go categories -16% -10% -4% -9% -7%
----------- --------- ---------- -------- -------------
Other convenience food
categories +14% +11% +13% +13% +14%
----------- --------- ---------- -------- -------------
The UK trading environment improved markedly in Q3 as the
economy reopened and mobility restrictions were eased, supporting
demand growth in food to go categories in particular. In addition
to the underlying market recovery, the Group benefitted from its
strong market position in the grocery retail channel, its customer
and format mix, and its portfolio across food to go and other
convenience categories. The Group worked closely with customers to
reactivate product ranges and formats during the period. Group
revenue growth in Q3 was also supported by an increasing
contribution from new business wins.
Reported Group revenue in Q3 was GBP360.2m, an increase of 49.7%
on the prior year. On a pro forma basis revenue increased by 53.1%
in the quarter, and was only 2.8% below the equivalent pre-COVID
levels in Q3 19. In June 2021, pro forma revenues were
approximately 1% above equivalent pre-COVID levels. In the first
three trading weeks of July, pro forma revenues were approximately
2% below equivalent pre-COVID levels.
Revenue in the Group's food to go categories was GBP236.5m in
Q3, representing growth of 91.1% on a reported and pro forma basis.
Pro forma Q3 revenue was 9.3% below equivalent pre-COVID levels in
Q3 19. Revenues recovered progressively through the quarter against
improving prior year comparatives. In the first three trading weeks
of July, revenues from the Group's food to go categories were 7%
below the equivalent pre-COVID levels in FY19.
Reported revenue in the Group's other convenience food
categories totalled GBP123.7m in Q3, an increase of 5.9% on a
reported basis, and a 11.1% increase on a pro forma basis.
Q3 inflation trends in the Group's main UK cost components were
broadly as anticipated. Supply chain and labour challenges are
increasing across the UK food system and the Group is working
closely with customers and suppliers to mitigate these challenges
and to maintain strong operational service levels.
The Group's improving profitability and strong cashflows
supported a reduction in Net Debt (excluding lease liabilities) and
an improvement in leverage metrics during Q3. As such the Group
comfortably met with the Net Debt: EBITDA covenant test at June
2021 of 5.0x. As at the end of Q3, the Group had committed debt
facilities of GBP570.1m with a weighted average maturity of 3.0
years.
In July 2021, the Group successfully completed a refinancing of
its near-term debt with its lending syndicate that improves the
maturity profile of the Group's debt and lowers annual interest
costs. The Private Placement Notes of $65m, which mature in October
2021, are being replaced by a new three-year term loan facility of
GBP45m, maturing in June 2024.
During the quarter the Group also concluded the latest triennial
assessment of the valuation and funding plan for its principal UK
legacy defined benefit pension scheme. The Group expects the annual
cash funding requirement for all schemes to be modestly below
previously guided levels of GBP15m, inclusive of the cash
contributions that were deferred over the course of the
pandemic.
(1) Pro forma references throughout this Trading Update are on a
constant currency basis. Reported revenue has been adjusted to
reflect the disposal of Premier Molasses Company Limited (Premier
Molasses) in Q1 2021. The adjustment excludes from reported
revenue, the revenue generated by Premier Molasses for the nine
month period to 26 June 2020 and the revenue generated in FY21 up
to the date of its disposal
(2) July 2021 performance based on three trading weeks to 16
July 2021
CONFERENCE CALL
A conference call for investors and analysts will be held at
8.30am on 27 July 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/ Nick Hayns/ Powerscourt Tel: +44 (0) 20
Sam Austrums 7250 1446
Billy Murphy or Louise Drury Communications Tel: +353 (0)
Walsh 1 260 5000
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
foodservice, grocery and other retailers, including all of the
major UK supermarkets. We have strong market positions in a range
of categories including sandwiches, salads, sushi, 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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