Food-to-go giant Greencore delivered a strong financial and operational performance in the first quarter of its latest financial year, with like-for-like (LFL) group revenue growing 5.8%.
The Dublin-headquartered manufacturer said this was underpinned by outstanding customer service levels (99.2%) and improved profit conversion year on year.
In its trading update for the 13 weeks ended 29 December 2023, Greencore posted total sales of £441.3m, which marked a 4.7% decrease compared to the same period the year prior. However on a Pro Forma basis, adjusting for the disposal of oils distributor Trilby Trading Ltd to KTC Edibles, its revenue was ‘broadly flat’ (down just 0.4%).
When further adjusting to report LFL sales, which takes into account business wins and losses, this became a growth of 5.8%. This rate of year-on-year improvement was shared in roughly equal measure by Greencore’s food-to-go and other convenience categories, recording revenues of £293.7m and £147.6m respectively.
Increases were said to be driven mainly by inflation recovery initiatives and increased manufactured volumes, which were 0.5% higher for the quarter on an LFL basis. Greencore had made the proactive decision to exit a number of contracts that were delivering sub-optimal returns in FY23, meaning its total volumes had declined by 4.8% on a Pro Forma basis.
Last year’s festive period saw Greencore enjoy a considerable uptick in LFL volumes, improving 5.6% year on year for the four weeks to 24 December 2023, far better than the overall market performance of 1.8% as per Kantar data. The company had also done well in sandwiches during the quarter, with LFL volumes increasing by 3% versus a flat year-on-year performance for the sector according to Circana data.
Without providing figures, Greencore said is Q1 profit conversion (ratio of profit to revenue) had improved strongly year on year in line with management expectations, benefitting from ongoing commercial, operational, and cost initiatives with significant focus on innovation and an optimal product mix to unlock value for the business. Its most recent full year accounts had reported adjusted operating profit of £76.3m, a 5.7% increase compared to FY2022.
Greencore CEO Dalton Philips said he was “extremely encouraged” by the strong start to the year. “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,” he commented.
A new appointment sees Catherine Gubbins joining as executive director and chief financial officer next month, with interim CFO Jonathan Solesbury remaining until May to ensure a smooth transition.
Greencore also refinanced its debt during the quarter, with a new five-year £350m sustainability-linked revolving credit facility replacing the £340m facility that was due to mature in January 2026.
Looking ahead, the company anticipates a more stable cost outlook for its current financial year compared to the prior term, with inflationary pressure on raw materials and energy now easing. It said it would continue to manage persistent wage inflation, resulting from the National Living Wage increases, through ongoing recovery and mitigating actions.
“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,” added Philips. “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.”
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