Delivering ahead of expectations in FY24, with strong momentum into FY25 and dividend reintroduction
Greencore Group plc (‘Greencore’ or the ‘Group’), the FTSE 250 leading manufacturer of convenience food in the UK, issues its results for the 52-week period ended 27 September 2024, reporting a stronger than expected performance and a positive outlook as the Group enters FY25.
SUMMARY FINANCIAL PERFORMANCE
| FY24 | FY23 | Change | |
| £m | £m | ||
| Group Revenue | 1,807.1 | 1,913.7 | -5.6% |
| Pro Forma Revenue Growth | -1.4% | ||
| Like-for-Like Revenue Growth | +3.4% | ||
| Gross margin | 33.2% | 29.7% | +350bps |
| Adjusted EBITDA | 153.7 | 132.8 | +15.7% |
| Group Operating Profit | 84.3 | 66.0 | +27.7% |
| Adjusted Operating Profit | 97.5 | 76.3 | +27.8% |
| Adjusted Operating Margin | 5.4% | 4.0% | +140 bps |
| Group Profit before taxation | 61.5 | 45.2 | +36.1% |
| Basic EPS (pence) | 10.1 | 7.2 | +40.3% |
| Adjusted EPS (pence) | 12.7 | 9.3 | +36.6% |
| Total Proposed Dividend per Share (pence) | 2.0 | – | +2.0p |
| Group Exceptional Items (after tax) | (9.4) | (5.5) | -£3.9m |
| Free Cash Flow | 70.1 | 56.8 | +£13.3m |
| Net Debt (excluding lease liabilities) | 148.1 | 154.0 | |
| Net Debt: EBITDA as per financing agreements | 1.0x | 1.2x | |
| Return on Invested Capital (“ROIC”) | 11.5% | 8.9% | +260bps |
FINANCIAL HIGHLIGHTS
- Like-for-Like (LFL) volume growth ahead of the wider market driven by a strong performance in key categories and gross margin improvement to 33.2% in FY24, up 350 basis points from 29.7% in FY23
- Delivery of Adjusted Operating Profit of £97.5m in FY24, up 27.8%, with +140bps of margin improvement to 5.4%
- ROIC increased to 11.5%, up 260 basis points from 8.9% in FY23
- Improved balance sheet position with Net Debt (excluding leases) to Adjusted EBITDA reduced to 1.0x
- Following the commitment to return £50m to shareholders in May 2024, the Group returned £40m to shareholders via share buybacks in FY24 and today announces the reintroduction of a dividend
- Proposed FY24 dividend of 2.0p per share (FY23: nil) payable on 6 February 2025
- Given the Group’s strong balance sheet and confidence in the outlook the Group is today announcing the launch of an additional £10m share buyback
STRATEGIC AND OPERATIONAL HIGHLIGHTS
- Continued delivery of “Horizon 2” resulting in an accelerated profit recovery
- Outstanding operational service levels of 99.2% achieved in FY24
- Several customer contract renewals in FY24 providing a solid multi-year platform
- New large ready meals contract successfully onboarded at the Kiveton site in late Q4 FY24
- Completed consolidation of soups business into single site providing efficiency gains
- Continued proactive management of contract profitability and manufacturing capacity utilisation
- Sustainable colleague engagement score at 81% in our People at the Core survey, up from 79% previously
- Transformation programme (Making Business Easier) launched to update the Group’s IT infrastructure and to improve process efficiency across the Group
- Agreement with UK Trustees to cease £9.8m in annual UK pension funding contributions when fully funded position is achieved
- The Group will hold a Capital Markets Day for analysts and institutional investors in London on 5 February 2025
OUTLOOK
Building on a strong FY24 performance and the ongoing successful execution of Horizon 2, Greencore has developed a leaner, more agile and efficient operating platform. This is driving exciting new innovations across our categories for both customers and the UK consumer. It has also accelerated profit recovery and enhanced the Group’s returns profile. Although it is early in the year and being mindful of the significant labour cost headwind announced in the UK Budget, the Group is encouraged by the business’s underlying momentum. The Group plans to offset the additional labour costs fully via further efficiency initiatives, alongside our usual inflation recovery measures in FY25. As a result, the Group anticipates FY25 Adjusted Operating Profit to be within the top half of the range of current market expectations. Further detail on medium- term plans will be shared at the Capital Markets Day on 5 February 2025.
Dalton Philips, Greencore Chief Executive Officer, said
“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. I would like to thank all our Greencore colleagues whose continued dedication has enabled us to deliver these results. 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.
The Group has maintained its strong financial discipline, with leverage reduced to 1.0x, while also returning a further £40m to shareholders and announcing an additional share buyback. I am also delighted that today marks a return to Greencore paying dividends. The strength of our balance sheet will provide us with the ability to invest in the growth and efficiency of our business and to pursue M&A opportunities on a selective basis, while also enabling us to deliver increasing returns to shareholders.
Looking ahead, we expect Adjusted Operating Profit for FY25 to be within the top half of the range of current market expectations and we’ll share more detail on our medium-term growth strategy at our Capital Markets Day in February”.
