Greencore bounces back, helped by food-to-go and convenience
The food manufacturer revealed group revenue was up 4.8% to £1.3bn for the year ended 24 September 2021. Adjusted operating profit was up 20% to £39m.
Greencore said early trading in the current financial year was encouraging and that as mobility increases towards pre-pandemic levels, there was strong demand in food-to-go and other convenience categories. However, it admitted it was being impacted by the supply chain and labour challenges affecting the whole industry.
It said that while these challenges remained ongoing, the group expected its current financial year to meet market expectations, assuming no mobility restrictions or lockdowns prompted by increases in COVID-19 infection rates in the UK.
Analyst view
Clive Black, head of research at Shore Capital said that its results were 'ahead of expectations’, but all eyes were on forecasts for the next two financial years.
“Much progress has been made by Greencore to rebound from the depths of deep lockdown 1.0, indeed, the underlying trading signs are encouraging," said Black. "Whilst so, COVID has a habit of staying one step ahead, and so Omicron reminds us of the fragility of rebuilding mobility.”
“Greencore is a high-quality operator, with well-invested plants serving markets with high barriers to entry. Overcoming COVID should yield considerable potential capital upside.”
The company also revealed that it has 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.
It pledged all its food surplus would feed those in need. And by 2030 it aimed to reduce the average meat content across the group's product portfolio by 30%, in line with the recommendations of the National Food Strategy.
"Greencore has weathered the storm and emerged strongly from a difficult period," said chief executive officer Patrick Coveney, who announced his resignation and move to travel foodservice player SSP as chief executive earlier this week. "Following a challenging first half in FY21, we made good progress in rebuilding revenues, cashflows and profitability in H2 [the second half of the past financial year] and are confident of maintaining this positive trajectory in the year ahead, particularly in the seasonally important second half.
New business
“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.”
Greencore revealed that in FY21 it had manufactured 645m sandwiches and other food-to-go products, 117m chilled prepared meals, and 256m bottles of cooking sauces, pickles and condiments.
