TIDMGNC
RNS Number : 8985N
Greencore Group PLC
26 January 2023
26 January 2023
Greencore Group plc
Soft start to the year. Accelerating delivery on inflation
recovery, cost reduction and profit conversion.
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 30 December 2022 ("Q1" or "the
quarter").
Q1 Trading(1)
PERFORMANCE(1)
-- Q1 23 Group reported revenue increased by 19.0% year on year
to GBP463.0m, driven by inflationary effects, with overall
manufactured volumes modestly behind year on year. Q1 23 Pro forma
revenue increased by 18.9% year on year.
-- Q1 23 Reported and pro forma revenue in Food to Go categories
increased by 14.5% year on year to GBP291.1m driven by inflationary
effects. The impact of Omicron on comparative figures in the prior
year was offset by the disruption impact of railway strikes in the
period. Food to Go volumes were slightly behind Q1 22 with
increased sandwich volumes being offset by lower demand in sushi
and salads. Revenue from distribution of third- party products was
also impacted by lower volumes which were approximately 10% behind
last year.
-- Q1 23 Reported revenue in Other Convenience increased by
27.6% year on year to GBP171.9m driven by inflationary effects and
the onboarding of new business in ready meals. Overall growth in
Other Convenience volumes was driven by strong volumes from our
ready meals business due to the new business win, in addition to a
strong performance across ambient sauces.
-- Profit conversion in the quarter was behind management
expectations due to a combination of lower volumes and a lag in
recovery of inflation over the calendar year end. To mitigate this
shortfall, we are immediately implementing further measures through
Better Greencore, accelerating, and broadening the scope of the
programme. The first phase is targeted to deliver annual recurring
benefits of approximately GBP30m in FY24. The second phase is now
focused on (a) contract margin enhancement following the dilutive
effect of new business onboarded and contract extensions agreed in
the last two years and (b) delivery of our operational excellence
programme.
-- While some raw materials and packaging inflation is easing,
labour cost and energy inflation remains relatively high. The Group
continues to focus on recovery of inflation from customers, and
while we expect to recover the significant majority of inflation,
we now anticipate a lag in that recovery.
-- On 29 November 2022, the Group announced the commencement of
a second share buyback programme whereby it will repurchase
ordinary shares of the Group for up to a maximum aggregate
consideration of GBP15m.
OUTLOOK(2)
-- The Board is cognisant of the short term potential impact of
the volatile recessionary environment and the cost-of-living
factors on consumer spending throughout the remainder of the year.
However, remains confident that a continued focus on the strengths
of the business combined with an accelerated delivery of
efficiency, cost reduction and productivity gains related to our
Better Greencore programme will support the further successful
progress of the Group in the years ahead.
-- Given the lower than expected volumes due to the disruptive
impact of continued industrial action on demand and operations and
the expected lag on inflation recovery the Group now expects to
generate an FY23 outturn at the lower end of current market
expectations.
-- The Group's balance sheet remains strong with substantial headroom in debt facilities.
-- Greencore will report its H1 23 results on 30 May 2023.
Commenting on the performance, Dalton Philips, CEO, said:
" It's a difficult, volatile market, and the business has got
off to a slower start to the year than envisaged. Given this, we
are doubling down on our initiatives on inflation recovery, and in
parallel, driving harder and faster to get our cost base to the
right level.
After just four months in the business, and notwithstanding the
obvious challenges, I remain highly enthusiastic about the
longer-term future of Greencore. Strategically we are well
positioned for the future growth given our customer base, the
categories in which we operate, our operational capabilities and
critically the people behind all of this. However, the immediate
focus is to tackle the shorter-term self-help actions which set the
foundations for margin recovery ."
For further information, please contact:
Dalton Philips Chief Executive Tel: +353 (0)
Officer 1 486 3326
Emma Hynes Chief Financial Tel: +353 (0)
Officer 1 486 3307
Rob Greening/ Nick Hayns/ Powerscourt Tel: +44 (0)
Sam Austrums 20 7250 1446
Billy Murphy/ Claire Rowley Drury Communications Tel: +353 (0)
1 260 5000
(1) Pro forma revenue presents the revenue on a constant
currency basis utilising Q1 23 FX rates on Q1 22 reported
revenue.
(2) Consensus market expectations as compiled by Greencore from
available analyst estimates on 25 January 2023 and as reported in
the Investor Relations section of the Group website.
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 FY22 we manufactured 795m sandwiches and other food to go
products, 127m chilled prepared meals, 249m bottles of cooking
sauces, pickles and condiments, and 47m of chilled soups and
sauces. We carry out more than 10,600 direct to store deliveries
each day. We have 16 world-class manufacturing sites and 18
distribution centres in the UK, with industry-leading technology
and supply chain capabilities. We generated revenues of GBP1.7bn in
FY22 and employ more than 14,000 people. We are headquartered in
Dublin, Ireland.
For further information go to www.greencore.com or follow
Greencore on social media.
Forward--looking statements
This announcement is based on information sourced from unaudited
management accounts.
Certain statements made in this document 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 based on information currently available to the Group. These
forward-looking statements include all statements that are not
historical facts and may generally, but not always, be identified
by the use of words such as 'will', 'aims', achieves',
'anticipates', 'continue', 'could', 'develop', 'should', 'expects',
'is expected to', 'may', maintain', 'grow', 'estimates', 'ensure',
'believes', 'intends', 'projects', 'sustain', 'targets', or the
negative thereof, or similar future or conditional 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. There may be risks and uncertainties
that the Group is unable to predict at this time or that the Group
currently does not expect to have a material adverse effect on its
business. You should not place undue reliance on any
forward-looking statements. These forward-looking statements are
made as of the date of this announcement. 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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