25
January 2024
Strong start to FY24 trading;
full year outlook in line with current market expectations
[1]
Greencore Group plc ('Greencore' or
the 'Group'), a leading manufacturer of convenience foods in the
UK, today issues its trading update for the 13 weeks ended 29
December 2023 ('Q1' or 'the quarter').
Q1
TRADING
|
Revenue
|
Revenue Growth (versus
FY23)
|
Q1
|
Q1
|
£m
|
Reported
|
Pro Forma
(2)
|
LFL
(2)
|
Group
|
441.3
|
-4.7%
|
-0.4%
|
+5.8%
|
Food to go categories
|
293.7
|
+0.9%
|
+0.9%
|
+5.8%
|
Other convenience categories
|
147.6
|
-14.2%
|
-3.0%
|
+5.9%
|
PERFORMANCE
· Greencore delivered a strong financial and operational
performance in Q1 FY24, underpinned by outstanding customer service
levels (99.2%), and improved profit conversion year on
year.
· Q1
FY24 Group reported revenue decreased by 4.7% to £441.3m. On a Pro
Forma basis, adjusting for the disposal of Trilby Trading Limited
in Ireland, revenue was broadly flat year on year. On a like for
like ('LFL') basis[2], revenue increased 5.8% year
on year.
· Total
manufactured volumes for the quarter declined 4.8%, due to the
proactive decision to exit a number of contracts that were
delivering sub-optimal returns in FY23. On a LFL
basis[3], manufactured volumes were 0.5% higher. For the
four weeks to 24 December 2023, LFL volumes were 5.6% higher year
on year, versus an overall market performance of
1.8%[4].
· Q1
FY24 reported revenue in food to go categories increased 0.9% to
£293.7m, on a LFL basis this was an increase of 5.8%. The LFL
increase was primarily due to an increase in LFL manufactured
volumes of 0.6% and inflation recovery initiatives. Total food to
go manufactured volumes, including exited contracts, declined 2.9%.
Overall Sandwich volumes increased 3% on a LFL basis versus a flat
year on year market performance[3].
· Reported revenue in other convenience categories was £147.6m,
a 14.2% decrease year on year. On a Pro Forma basis this
represented a 3.0% decrease, reflecting the
disposal of Trilby Trading Limited. On a LFL basis this represented
a 5.9% increase, which was driven by ongoing inflation recovery
initiatives. Total volumes in other convenience categories,
including exited contracts, declined 7.3%. On a LFL basis volumes
increased 0.4%. Overall Chilled Ready Meals volumes increased 2% on
a LFL basis versus a 2% market decline[3].
· The
decision to proactively exit several contracts in FY23, including a
significant Chilled Ready Meals contract, accounted for
approximately a 6% decrease in year on year revenue on a Pro Forma
basis.
· Profit
conversion in Q1 FY24 improved strongly year on year and was in
line with management expectations. Profit conversion benefitted
from on-going commercial, operational and cost initiatives with
significant focus on innovation and an optimal product mix to
unlock value for Greencore.
· As
previously announced, Catherine Gubbins joins the business on 6
February 2024, following her appointment as Executive Director and
Chief Financial Officer. Jonathan Solesbury will remain with the
Group until the end of May 2024 to ensure a smooth
transition.
· In Q1,
the Group refinanced its debt facilities with a new five year £350m
sustainability linked revolving credit facility ('RCF'), maturing
in November 2028 with the option to extend for up to a further two
years. The facility also includes a £100 million accordion
option. This new facility replaces the existing £340m RCF that was
due to mature in January 2026.
OUTLOOK [2]
· Inflationary pressures on raw materials and energy are now
easing, providing a more stable cost outlook in FY24 compared to
the prior year. Wage inflation will persist due to National Living
Wage increases, which we will continue to manage through ongoing
recovery and mitigating actions.
· Following the strong financial and operational start to the
year, with improved profit conversion, the Group expects to
generate an FY24 outturn in line with current market
expectations[1].
Commenting on the performance, Dalton Philips, Chief Executive
Officer, said:
"I
am extremely encouraged by the strong start to the year for our
business. Our manufactured like for like volume growth of 0.5% in
the quarter, continued to outperform the market in the key
categories in which we operate. This performance has once again
been supported by our outstanding operational service levels to
ensure availability of products to our customers.
Our focus as a
team is to provide fresh and healthy foods to our customers and
consumers each and every day.
Our progress as a business has been delivered through
continued effective operational and commercial initiatives, as
detailed in November, this has supported improved profit conversion
and a strong profit outturn in the quarter. We are committed to
continuing to drive profitability through commercial discipline and
are investing in several initiatives to develop a robust platform
for future growth.
While we remain mindful of the seasonally important second
half of the year, we are confident that the Group will deliver a
full year outturn in line with current market
expectations."
Greencore will report its FY24
interim results for the half year ending 29 March 2024 on 21 May
2024.
1 Consensus FY24 market
expectations of Adjusted Operating Profit range of £80.5m to
£85.0m, as compiled by Greencore from available analyst estimates
on 15 January 2024 and as reported in the Investor Relations
section of the Group website.
2 Pro-Forma revenue growth
(versus FY23) adjusts reported revenue in FY23 to reflect the
disposal of Trilby Trading Limited. Like for like revenue growth
(versus FY23) adjusts Pro forma revenue for business wins and
losses.
3 Volumes are on a like for
like basis and adjust for business wins and losses. Market
performance in those categories, unless stated, is Circana data for
the 12 weeks to 24 December 2023.
4 Kantar data based on 4 weeks
to 24 December 2023.
For
further information, please contact:
Jonathan Solesbury
|
Interim Chief Financial
Officer
|
Tel: +353 (0) 1 605 1000
|
Curtis Armstrong
|
Finance Director - FP&A and
IR
|
Tel: +44 (0) 1246
384649
|
David Marshall
|
Head of Capital Markets
|
Tel: +353 (0) 1 605 1000
|
|
|
|
Jonathan Neilan
|
FTI Consulting
|
Tel: +353 (0) 86 231 4135
|
Nick Hasell
|
FTI Consulting
|
Tel: +44 (0) 203 727 1340
|
Forward‐looking statements
Certain statements made in this
document are, or may be deemed to be, 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.
The forward-looking statements contained in this document include
statements relating to the financial condition, results of
operations, business, viability and future performance of the Group
and certain of the Group's plans and objectives. These
forward-looking statements include all statements that do not
relate only to historical or current 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, but their absence does not mean that a
statement is not forward-looking.
By their nature, forward-looking
statements are prospective and 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. Investors should read the discussion of
risk in the Group's Annual Report and Financial Statements for the
year ended 29 September 2023 issued on 28 November 2023. 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. None of the Company or any
of its associates or Directors, officers or advisers provides any
representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in
this document will actually occur. 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, whether
as a result of new information, future events or otherwise, other
than as required by law.
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. We have 16 world-class manufacturing sites and
17 distribution centres in the UK, with industry-leading technology
and supply chain capabilities. We generated revenues of £1.9bn in
FY23 and employ 13,600 people. We are headquartered in Dublin,
Ireland.
For further information go to
www.greencore.com or follow Greencore on social media.