- Q4 like-for-likes up 3.7%
- Operating profit forecast raised again
- Return to dividends promised
Sandwich, salad and sushi maker Greencore (GNC) has upgraded full year profit guidance yet again following what CEO Dalton Philips dubbed an ‘outstanding’ performance, with profit conversion in the final quarter beating management’s expectations.
Shares in the FTSE 250 food maker, which supplies major UK supermarkets, coffee shops, discounters and convenience retailers, fattened up 9% to 195.6p on the latest slice of nourishing news.
OPERATING PROFIT UPGRADE
Dublin-headquartered Greencore said operating profit for the year ended 27 September 2024 will be ahead of current market expectations and in the £95 million to £97 million range.
That’s up from the £88 million to £90 million range provided in July, which was itself an upgrade on earlier guidance of between £86 million and £88 million, and follows better than expected fourth quarter profit conversion from the group.
During the final quarter, Greencore’s like-for-like sales grew 3.7% year-on-year with almost all product categories experiencing some volume growth.
SOLVENCY RATIOS IMPROVING
While full-year sales are expected to weigh in at roughly £1.8 billion, a touch below the £1.91 billion delivered in full year 2023, Greencore’s net debt excluding lease liabilities will be around £148 million, down £6 million year-on-year and leaving the cash-generative company’s net debt to EBITDA (earnings before interest, tax, depreciation, and amortisation) ratio at the lower end of management’s 1 times to 1.5 times medium term target range.
Well on the way to completing its £40 million buyback programme, Greencore also reiterated its intention to return to the dividend list for full-year 2024 as part of its capital return programme.
WHAT DID THE CEO SAY?
Philips said Greencore delivered an ‘outstanding performance with our full-year 2024 results now expected to exceed current market expectations. Providing high-quality, fresh and healthy food to our customers every day is at the heart of what we do.’
He added: ‘As we enter the new financial year, our focus remains on making really great food, rebuilding our profitability, and positioning Greencore to be the UK’s leading convenience foods manufacturer.’
EXPERT VIEWS
‘It is most pleasing for us to be, once again, positively updating on Greencore’s trading progress, which is filtering into robust profit recovery and a strengthening of solvency ratios,’ said Shore Capital.
‘All in all, CEO, Dalton Philips, and his team deserve a pat on the back for the work undertaken, and we look forward to forthcoming updates as the firm goes through its horizon planning.’
Russ Mould, investment director at AJ Bell, commented: ‘Greencore served up a veritable feast with guidance for operating profit to be ahead of expectations. The food-on-the-go producer has delivered an impressive comeback after being derailed by the pandemic where fewer office workers nipped out for one of its sandwiches at lunchtime.
‘An efficiency programme combined with an evolution of hybrid working towards greater days in the office have served to benefit the group. A 178% share price return over the past 12 months has also filled shareholders’ bellies.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
