Food-to-go giant Greencore has reported a ‘stronger than expected’ performance in its latest full-year results with profits leaping by more than a quarter.
The Dublin-headquartered sandwich supplier gave a positive outlook upon entering FY25 after posting group operating profit of £84.3m for the 52 weeks to 27 September 2024, marking a 28% increase on the previous annual period.
Adjusted EBITDA jumped by 15.7% to £153.7m during the year, while adjusted operating margin hit 5.4% to represent a 140-basis points improvement on FY23. This was supported by a slowing of inflation on Greencore’s main cost components, which was recovered or mitigated through mechanisms such as a pass-through of cost increases, cost reductions, product and range reformulations, and alternative sourcing.
The accelerated profit recovery is said to be a result of Greencore ‘Horizon 2’ rebuild strategy, which will continue over the next two financial years. It follows the ‘Horizon 1’ stabilising strategy delivered in FY23.
Meanwhile, group revenue of £1.8bn was 5.6% down on its previous financial year, which the business said was largely driven by the disposal of edible oils distribution business Trilby Trading to KTC Edibles in September 2023.
The proactive decision to exit a number of low returning contracts during FY23 also accounted for the decline, it noted, although this was partially offset by inflation and price recovery. Adjusting for these, there was like-for-like volume growth of 0.5%, which was described as strong relative to the wider market performance, and like-for-like revenue growth of 3.4%, which considers the impact of new business wins and losses.
Greencore manufactured a total of 748m sandwiches during FY24, with its food-to-go category (sandwiches, salads, sushi, and chilled snacking) accounting for approximately 69% of group revenue. While food-to-go sales fell by £8m in the period, like-for-like revenue grew by 4%.
“The Group delivered excellent progress against its key financial metrics and strategic priorities in FY24, underpinned by close customer engagement in a period that continued to be defined by cost inflation and muted consumer confidence,” commented Greencore CEO Dalton Philips.
“Over the last 12 months we have remained focused on making high quality food, rebuilding our profitability, and positioning Greencore to be known as the UK’s leading convenience foods manufacturer. We continue to make progress against each of our strategic objectives and are well positioned to continue this momentum in FY25 and over the longer term.”
With a total of £40m returned to shareholders via share buybacks in FY24, the company has now announced the reintroduction of a dividend after a four-year absence. This had been a source of frustration at activist investor Oasis Capital, which almost doubled its stake in Greencore earlier this year to become its largest shareholder. The proposed dividend of 2p per share is to be payable on 6 February 2025.
Looking forward, Greencore revealed it was anticipating additional costs of around £7.5m next year relating to the national living wage increases and national insurance changes getting introduced in April 2025. These cost rises would be fully offset via further efficiency initiatives alongside usual inflation recovery measures in FY25, it asserted.
Philips said the company expected adjusted operating profit for FY25 to be “within the top half” of the range of current market expectations. “We’ll share more detail on our medium-term growth strategy at our Capital Markets Day in February,” he added.
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