Greencore shrugs off horsegate in full year results

Damian McNeela, of Panmure Gordon, said: “Despite the issues created by Horsegate, the company’s convenience foods business delivered 3.5% revenue growth to £1,129M and a 20 basis points improvement in operating margins to 6.5%.” ​

Group revenues climbed by 3% to £1,197M for the year to September 27. Operating profit was up by 8.1% to £76.5M, while adjusted profit before tax increased by nearly 12% to £61.6M.

Earnings per share rose by 13.3% to 14.5p. Net debt was £25M lower at £232M.

‘9% earnings per share growth’​

McNeela concluded that the firm’s strong position in growth categories on both sides of the Atlantic meant it was well positioned to deliver a further 9% earnings per share growth in financial year 2014.

Panmure Gordon repeated its ‘buy’ recommendation on Greencore’s stock.

Investec analyst Nicola Mallard said Greencore had delivered “very respectable earnings per share growth”​ and reduced debt at a faster pace than expected, against a tougher market backdrop.

The outlook for next year looked promising – as the horsemeat scandal will be absent and more US progress is expected as the company consolidates recent business additions, predicted Investec. It repeated its ‘buy’ recommendation on Greencore’s stock.

Greencore reported that its UK Food to Go business – which represented about 40% of convenience foods revenues and comprises sandwiches, sushi, snack and side of plate salads – benefited from good summer weather in July and early August. After a slow first half, the sandwiches sub-category climbed by 5.1%.

The broader chilled food to go market – including sandwiches, sushi, snack and side of plate salads – grew by 5.6%. Revenue in the combined Food to Go business grew by 4.4%.

Major customers​

In a statement accompanying the results, Greencore said: “We strengthened our position in sandwiches with a number of major customers, and also saw promising early results from several significant range refreshes.”​

The firm confirmed the completion of its integration of Uniq and the transfer of all premium desserts production to the refurbished Evercreech facility, together with the disposal in January of the Minsterley facility. International Cuisine was integrated successfully within the prepared meals business unit and performed in line with expectations, delivering strong synergies, said the firm. 

Greencore ceo Patrick Coveney said the company had made clear commercial, strategic and organisational progress across the group.

“We consolidated our portfolio after the extensive deal activity of the three preceding years, increased revenue at our US business by over 60% and realigned our resources behind a food to go led strategy,”​ said Coveney.

“All this was achieved despite a weak UK consumer environment, limited growth in retail food markets, persistent input cost inflation and the negative impact of the horsemeat scandal.​

“Despite these challenges, we grew revenues, strengthened margins and delivered double digit growth in adjusted earnings per share. We enter the new financial year with good momentum in our businesses. We remain well positioned to deliver further progress in financial year 2014 and beyond.”​

Meanwhile, Alan Williams, Greencore's chief financial officer, told FoodManufacture.co.uk that the growth of key clients 7-Eleven and Starbucks​ would fuel the manufacturer's US growth.

Greencore at a glance​

• Group revenues up by 3% to £1,197M.
• Operating profit up by 8.1% to £76.5M.
• Adjusted profit before tax up by 11.8% to £61.6M.
• Earnings per share up by 13.3% to 14.5p.
• Net debt £25M lower at £232M.