Greencore Group plc FY22 Results

Strong improvement in revenue and profitability in FY22

Greencore Group plc (‘Greencore’ or the ‘Group’), a leading manufacturer of convenience food in the UK, today issues its results for the 53 weeks ended 30 September 2022.

PERFORMANCE ^1,2

• Strong growth in food to go and other convenience categories drove Group Revenue growth of 31.3% above FY21 levels to £1.7bn and 20.3% above FY19 levels
• Pro Forma Revenue growth in food to go categories increased by 35.2% year on year, driven by a combination of strong underlying volume growth, contribution from new wins, and increased pricing as we continued to recover inflation
• Pro Forma Revenue growth in other convenience categories increased by 19.2%, driven by increased underlying pricing and higher revenue in the Group’s Irish ingredients trading business
• Significant growth in Adjusted Operating Profit, in line with previous guidance, up £33.2m to £72.2m (FY21: £39.0m), with Adjusted Operating Margin of 4.2% (FY21: 2.9%)
• Group ROIC increased to 8.4% from 4.5% at the end of FY21 due to the increase in Operating Profit
• Adjusted EPS of 9.2p up 5.5p (FY21: 3.7p)
• Net Debt (excluding lease liabilities) of £180.0m at year end (FY21: £183.1m) after £33.1m strategic capex and £8.8m share buyback completed during the year
• Robust balance sheet with substantial liquidity headroom and continued progress on deleveraging. Net Debt: EBITDA of 1.5x as measured under financing agreements has now reached the Group’s target range of 1.0x – 1.5x. Committed facilities of £578.0m (FY21: £433.6m)
• Completed £10m share buyback programme in early October which is the first phase of the £50m value return to shareholders announced in May 2022. Intention to return a further £15m of value to shareholders in the form of a share buyback in FY23

OPERATING & STRATEGIC UPDATE ¹

• Maintained high operational service levels during the year, working closely with our customers and supply partners to manage ongoing supply-side challenges and disruptions
• Completed onboarding of new business wins, expanding the Group’s product ranges and channel reach. New business wins accounted for approximately 4.4% of the Group’s pro forma revenue growth in FY22
• Recovered or mitigated all FY22 input cost and other inflation
• Completed strategic capital investment programme to support the delivery of previously announced business wins. There are some commissioning challenges as we ramp up production and we are working to resolve these in the first half of FY23
• Launched Better Greencore, our change programme with the first phase targeted to deliver annual recurring benefits of approximately £30m in FY24. The second phase, focusing on operational and technological excellence, will be launched in FY23. The Group recognised an exceptional charge of £16.1m in respect of the work carried out in the financial year
• Advanced our sustainability agenda relating to the data and systems framework to measure performance effectively. The Group also commenced a collaboration project with a key customer on category level eco-footprinting

OUTLOOK  ¹

Revenue performance in the early weeks of FY23 has broadly held up however, we do note some mix effect between categories. We remain cautious about the potential impact of the recessionary environment and cost-of-living factors on consumer spending through the year ahead, the impact of which has not yet been fully absorbed by the consumer.

We expect that FY23 will be a year of further substantial inflation and are working closely with our customers on recovery and mitigation. We remain focused on the execution of our change programme, Better Greencore, and are planning for the second phase which will focus on operational and technological excellence.

We continue to make decisions on customer contracts which are no longer economic, with a heightened focus on our ability to recover inflation.

The Board is confident that a continued focus on the strengths of the business, underpinned by our resilient balance sheet and the efficiency and productivity gains related to our Better Greencore programme will support the further successful progress of the Group in the years ahead.

SUMMARY FINANCIAL PERFORMANCE ^1,2

Commenting on the results, Dalton Philips, Chief Executive Officer (CEO), said:

“Greencore has made great progress in recovering from a very challenging period with revenue, profits, leverage and returns all improving significantly in FY22. I want to acknowledge and thank our teams and colleagues who have done and continue to do a fantastic job every day in driving the business forward.

My first few weeks in the CEO role have confirmed to me the fantastic capability and potential of this business. Our leading market positions, close customer relationships, well invested facilities and intense focus on efficiencies give us confidence as we continue to navigate our way through the challenges of the current macroeconomic climate.”

1. The Group uses Alternative Performance Measures (‘APMs’) which are non-IFRS measures to monitor the performance of its operations and of the Group as a whole. These APMs along with their definitions are provided in the Appendix to the Full Year Results Statement.
2.  The financial year is the 53-week period ended 30 September 2022 with comparatives for the 52-week period ended 24 September 2021.

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