Strong profit growth as recovery accelerates – full year to be ahead of current market expectations1
Greencore Group plc (‘Greencore’ or the ‘Group’), a leading manufacturer of convenience food in the UK, today issues its results for the half year ended 29 March 2024 (“H1 24”).
SUMMARY FINANCIAL PERFORMANCE
| H1 24 | H1 23 | Change | |
| £m | £m | ||
| Revenue | 866.1 | 925.8 | -6.4% |
| Like-for-Like Revenue Growth | +4.1% | ||
| Adjusted EBITDA | 55.9 | 39.9 | +40.1% |
| Group Operating Profit | 25.3 | 3.6 | +602.8% |
| Adjusted Operating Profit | 28.3 | 11.8 | +139.8% |
| Adjusted Operating Margin | 3.3% | 1.3% | +200bps |
| Profit/(Loss) Before Taxation | 14.7 | (6.2) | +£20.9m |
| Adjusted Profit Before Tax | 16.9 | 3.4 | +397.1% |
| Basic EPS (pence) | 2.5 | (0.9) | +3.4p |
| Adjusted EPS (pence) | 2.8 | 0.5 | +2.3p |
| Group Exceptional Items (after tax) | (1.3) | (4.8) | +72.9% |
| Free Cash Flow | (26.5) | (24.3) | -9.1% |
| Net Debt (excluding lease liabilities) | (198.0) | (219.4) | +£21.4m |
| Net Debt: EBITDA as per financing agreements | 1.4x | 1.9x | +0.5x |
| Return on Invested Capital (“ROIC”) | 10.2% | 7.5% | +270bps |
FINANCIAL HIGHLIGHTS2,3, 4
- Volume growth ahead of the wider market3 driven by key category outperformance
- Reported revenue decline reflects decision to exit a number of low margin contracts in FY23 and the Trilby Trading disposal, on a Like-for-Like (“LFL”) basis4, revenue growth was 4.1% with a 1.2% increase from volume growth and mix impact
- Strong growth in Adjusted Operating Profit to £28.3m with 200bps margin improvement
- ROIC increased 270bps to 10.2%, driven by improvements across product portfolios, manufacturing footprint and disciplined capital investment
- Strong balance sheet at period end with Net Debt (excluding leases) to Adjusted EBITDA as per financing arrangements reducing to 1.4x (H1 23: 1.9x)
- Target to return a further £50m to shareholders over next 12 months, commencing with a share buyback of up to £30m and if the business continues to trade as expected the Board intends to declare a dividend for the year to September 2024
- Currently expect FY24 Adjusted Operating Profit in a range of £86-88m, ahead of current market expectations1
STRATEGIC & OPERATIONAL HIGHLIGHTS
- Strong progress across “Horizon 2”, driving efficiency, rebuilding profitability and enhancing returns
- Outstanding operational service levels of 99.2% achieved in H1 24
- Continuing to enhance performance across manufacturing footprint and will consolidate soups business into single site providing efficiency gains
- New large ready meals contract win will be onboarded at the Kiveton site in late Q4 24
- Transformation programme launched in H1 24 addressing outdated IT infrastructure, targeted at improving process efficiencies across the Group
- Expect a reduction of £9.8m in annual UK pension funding contributions from September 2025
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018 (“MAR”).
Dalton Philips, Chief Executive Officer, said:
“Greencore delivered excellent progress against its strategic priorities in the first half and continued to outperform the market in a difficult consumer spending environment.
The Group’s accelerating financial performance is very encouraging as we focus on driving profitability and returns. We are working with our major retail customers to develop new products and new offerings which are driving the growth of our Food to Go segment ahead of the market. We have exited low margin business and are undertaking a range of actions to increase the returns profile of each element of the portfolio. We have many opportunities to continue to grow our business profitability and have commenced investing in our IT infrastructure to create a solid platform for growth and enable further efficiency gains across the Group.
Notwithstanding this additional investment, and while our seasonally stronger second half is still ahead of us, we now expect FY24 adjusted operating profit in a range of £86-88m, ahead of current market expectations1.”
