Ham & Free-Range Egg sandwich from the Jamie Oliver Deli by Shell range manufactured by Greencore

Source: Greencore

Greencore has reported volume growth ahead of the wider market in its latest full-year results, which the food-to-go manufacturer noted comes despite exiting low margin business.

The company’s accounts for the 52 weeks to 29 September 2023 showcased a strong second half performance taking group revenue to £1.9bn, up 10% from the same period the year prior. This was said to be achieved through a combination of underlying volume growth, including net new business wins and also recovering significant levels of inflation. 

Its adjusted operating profit, meanwhile, was confirmed as £76.3m, a 5.7% increase compared to FY2022 and a slight improvement on expectations stated in its trading update.

Greencore CEO Dalton Philips

Source: Greencore

Greencore CEO Dalton Philips

“In a challenging market environment, we have stabilised the business, and made good strategic progress,” said Greencore CEO Dalton Philips, adding that it had delivered above-market volume growth (according to Kantar grocery market data for the 52 weeks to 1 October 2023) despite ending a number of low margin contracts.

“We also successfully mitigated and recovered the majority of our input cost inflation through effective operational and commercial initiatives,” Philips continued. “We are encouraged by our FY23 performance and the progress across the business. That performance is testament to the strength of our relationships with our customers and suppliers and, in particular, to the hard work and dedication of the entire Greencore team.”

Dublin-headquartered Greencore currently employs around 13,600 people at 16 production sites and 17 distribution centres across the UK, carrying out more than 10,400 direct to store deliveries every day.

It supplies a wide product range including bakery items such as pre-packed sandwiches, baguettes, and wraps to all major UK supermarkets as well as convenience and travel retail outlets, discounters, coffee shops, foodservice and other retailers. Approximately 779m sandwiches and other food-to-go products were manufactured by the Greencore group during the past financial year.

Other financial highlights from Greencore’s results included a reduction of Net Debt (excluding leases) to EBITDA, going down to 1.2x from the previous ratio of 1.5x, a rise in return on invested capital from 8.4% (FY2022) up to 8.9%, and a continuation of its share buyback programme set to deliver on its commitment of £50m value return.

“The group continues to focus on improving profitability and is investing in a number of initiatives focused on both optimising our network and our IT infrastructure, to give us the platform for future growth,” Philips added. “Our stronger balance sheet provides the financial flexibility to underpin this growth. We are pleased with the start to the year and although it’s early days, the group remains confident in delivering FY24 within the range of current market expectations.”

Outstanding operational service levels of 98.5% were said to have been achieved throughout the financial year at Greencore, which successfully averted a workers strike at its Manton Wood site in Nottinghamshire in September by offering a substantial pay rise.

Additionally, the disposal of its Ireland-based edible oils distributor Trilby Trading Limited to KTC Edible Oils was noted to help the business increase its focus on the convenience food market.

Green ambitions

Greencore pointed to a refocused sustainability agenda including a new five-year £350 million revolving credit facility (RCF), which incorporates performance targets that are aligned with its long-term sustainability strategy.

“Greencore continues to deliver on its ambition to build a stronger, more efficient business serving our customers and consumers across the UK,” Philips commented. This new facility provides us with significant new financial flexibility to deliver on our growth objectives while aligning our financing arrangements with our sustainability targets.”

The RCF is provided by Allied Irish Banks plc (which acted as a sustainability co-ordinator), Barclays Bank Plc, Coöperatieve Rabobank U.A. (trading as Rabobank Dublin), Danske Bank A/S, Irish Branch, HSBC Continental Europe, The Governor and Company of the Bank of Ireland (acted as an agent).

Greencore also announced the appointment of Catherine Gubbins as executive director and chief financial officer. Gubbins will start on 6 February 2024 and is joining from DAA plc, the global airports and travel retail group where she has worked for nine years in various roles including as group CFO.