Return to revenue and profit growth – emerging strongly from a challenging period
Greencore Group plc (‘Greencore’ or the ‘Group’), a leading manufacturer of convenience food in the UK, today issues its results for the year ended 24 September 2021.
PERFORMANCE 1
- Group Revenue up 4.8% to £1,324.8m, driven by a return to growth in food to go categories and solid growth in other convenience categories
- Adjusted Operating Profit up 20.0% to £39.0m, with Adjusted Operating Margin of 5.2% in the second half of the year
- Adjusted EPS of 3.7p
- Strong free cash flow of £72.2m, driven by improved profitability and working capital inflows as volumes rebounded
- Significant reduction in net Debt (excluding lease liabilities) to £183.1m, with Net Debt: EBITDA of 2.0x as measured under financing agreements
- Cash and undrawn committed bank facilities of £433.6m at year end, and now exited from temporary covenant waiver period as planned
STRATEGIC DEVELOPMENTS 1
- Executed strongly against new business wins, contributing over a third of the 38% pro forma revenue growth in food to go categories in Q4 21 and supporting continued diversification of the Group’s product and channel footprint
- Renewed and extended several commercial relationships, in line with the long term strategic partnership approach with customers to support their food to go offerings and to secure growth for the Group in key categories and open up new growth opportunities in new categories and formats
- Progressing well with the previously announced two year capital investment of approximately £30m, supporting delivery of new business wins across three manufacturing sites
- Advanced on multiple sustainability goals including the launch of fully recyclable, plastic free sandwich skillet trials for customers in September 2021, and the establishment of emission reduction targets, verified by the Science Based Targets Initiative
- Outlined new sustainability commitments for FY22 to transparently share data on the health and sustainability profile of our products with stakeholders, and to ensure all the Group’s food surplus goes to feed those in need, and also to reduce by 2030 the average meat content across the Group’s product portfolio by 30%, in line with the recommendations of the National Food Strategy
OUTLOOK 1,2
- Trading in early FY22 has been encouraging with continued positive revenue momentum across the business. As mobility increases towards pre-pandemic levels, there is strong demand in food to go and other convenience categories
- The Group is committed to recovering against ongoing input cost and other inflation with customers and is progressing well in this regard. The pace of profit conversion continues to be impacted by supply chain and labour challenges that are affecting the industry overall
- Though these challenges remain ongoing, the Group expects to generate an FY22 outturn in line with current market expectations. This assumes no material resumption of mobility restrictions or lockdowns arising from increases in COVID-19 infection rates in the UK. Profitability will be weighted towards the second half of the year, reflecting the seasonality of the Group’s food to go categories
- The Board is committed to a dynamic capital management policy. While the Group remains focused on deleveraging, it will also balance the ongoing strategic and investment needs of the business and the capacity to return surplus cash to shareholders. The Board is currently assessing the specific capital allocation strategy and is committed to recommencing value return to shareholders in FY22.
SUMMARY FINANCIAL PERFORMANCE 1
| FY21 | FY20 | Change | |
| £m | £m | ||
| Group Revenue | 1,324.8 | 1,264.7 | +4.8% |
| Pro Forma Revenue Growth | +6.2% | ||
| Adjusted EBITDA | 92.3 | 85.0 | +8.6% |
| Group Operating Profit | 42.8 | 12.9 | +231.8% |
| Adjusted Operating Profit | 39.0 | 32.5 | +20.0% |
| Adjusted Operating Margin | 2.9% | 2.6% | +30bps |
| Group Profit/(Loss) Before Tax | 27.8 | (10.8) | |
| Adjusted Profit Before Tax | 22.6 | 17.3 | +30.6% |
| Basic EPS (pence) | 5.0 | (2.6) | |
| Group Exceptional Items (after tax) | 12.1 | (20.5) | |
| Adjusted EPS (pence) | 3.7 | 2.9 | +27.6% |
| Total proposed dividend per share (pence) | – | – | |
| Free Cash Flow | 72.2 | (29.7) | +£101.9m |
| Net Debt | 242.7 | 411.2 | |
| Net Debt (excluding lease liabilities) | 183.1 | 350.5 | |
| Net Debt:EBITDA as per financing agreements | 2.0x | 4.4x | |
| Return on Invested Capital (“ROIC”) | 4.5% | 4.1% | |
Commenting on the results, Patrick Coveney, Chief Executive Officer, said:
“Greencore has weathered the storm and emerged strongly from a difficult period. Following a challenging first half in FY21, we made good progress in rebuilding revenues, cashflows and profitability in H2 and are confident of maintaining this positive trajectory in the year ahead, particularly in the seasonally important second half.
The strong recovery of the UK food to go market, as well as solid performance in other convenience food categories, underpins this confidence. New business wins achieved last year are contributing to our momentum, and we anticipate delivery of profits for the year ahead in line with current market expectations.
With strong free cashflow and a significant reduction in leverage achieved in FY21, the Group enters the new financial year on a robust financial footing. Greencore has a strong position in the dynamic UK convenience food market and, with demand remaining strong in the early stages of FY22, has confidence in its medium-term prospects.”
