REG - Greencore Group PLC - FY24 Q1 Trading Update

GreencoreAnnouncement

25/01/2024 07:00

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RNS Number : 8357A  Greencore Group PLC  25 January 2024

25 January 2024

 

Strong start to FY24 trading; full year outlook in line with current market
expectations ( 1 )

 

Greencore Group plc ('Greencore' or the 'Group'), a leading manufacturer of
convenience foods in the UK, today issues its trading update for the 13 weeks
ended 29 December 2023 ('Q1' or 'the quarter').

Q1 TRADING

                               Revenue  Revenue Growth (versus FY23)
                               Q1       Q1
                               £m       Reported    Pro Forma ((2))  LFL ((2))
 Group                         441.3    -4.7%       -0.4%            +5.8%
 Food to go categories         293.7    +0.9%       +0.9%            +5.8%
 Other convenience categories  147.6    -14.2%      -3.0%            +5.9%

 

PERFORMANCE

·      Greencore delivered a strong financial and operational
performance in Q1 FY24, underpinned by outstanding customer service levels
(99.2%), and improved profit conversion year on year.

 

·      Q1 FY24 Group reported revenue decreased by 4.7% to £441.3m. On
a Pro Forma basis, adjusting for the disposal of Trilby Trading Limited in
Ireland, revenue was broadly flat year on year. On a like for like ('LFL')
basis( 2 ),  revenue increased 5.8% year on year.

 

·      Total manufactured volumes for the quarter declined 4.8%, due to
the proactive decision to exit a number of contracts that were delivering
sub-optimal returns in FY23. On a LFL basis( 3 ), manufactured volumes were
0.5% higher. For the four weeks to 24 December 2023, LFL volumes were 5.6%
higher year on year, versus an overall market performance of 1.8%( 4 ).

 

·      Q1 FY24 reported revenue in food to go categories increased 0.9%
to £293.7m, on a LFL basis this was an increase of 5.8%. The LFL increase was
primarily due to an increase in LFL manufactured volumes of 0.6% and inflation
recovery initiatives. Total food to go manufactured volumes, including exited
contracts, declined 2.9%. Overall Sandwich volumes increased 3% on a LFL basis
versus a flat year on year market performance( 3 ).

 

·      Reported revenue in other convenience categories was £147.6m, a
14.2% decrease year on year. On a Pro Forma basis this represented a 3.0%
decrease, reflecting the disposal of Trilby Trading Limited. On a LFL basis
this represented a 5.9% increase, which was driven by ongoing inflation
recovery initiatives. Total volumes in other convenience categories, including
exited contracts, declined 7.3%. On a LFL basis volumes increased 0.4%.
Overall Chilled Ready Meals volumes increased 2% on a LFL basis versus a 2%
market decline( 3 ).

 

·      The decision to proactively exit several contracts in FY23,
including a significant Chilled Ready Meals contract, accounted for
approximately a 6% decrease in year on year revenue on a Pro Forma basis.

 

·      Profit conversion in Q1 FY24 improved strongly year on year and
was in line with management expectations. Profit conversion benefitted from
on-going commercial, operational and cost initiatives with significant focus
on innovation and an optimal product mix to unlock value for Greencore.

 

·      As previously announced, Catherine Gubbins joins the business on
6 February 2024, following her appointment as Executive Director and Chief
Financial Officer. Jonathan Solesbury will remain with the Group until the end
of May 2024 to ensure a smooth transition.

 

·      In Q1, the Group refinanced its debt facilities with a new five
year £350m sustainability linked revolving credit facility ('RCF'), maturing
in November 2028 with the option to extend for up to a further two years.
The facility also includes a £100 million accordion option. This new facility
replaces the existing £340m RCF that was due to mature in January 2026.

 

 

OUTLOOK ( 2 )

·      Inflationary pressures on raw materials and energy are now
easing, providing a more stable cost outlook in FY24 compared to the prior
year. Wage inflation will persist due to National Living Wage increases, which
we will continue to manage through ongoing recovery and mitigating actions.

 

·      Following the strong financial and operational start to the year,
with improved profit conversion, the Group expects to generate an FY24 outturn
in line with current market expectations( 1 ).

 

Commenting on the performance, Dalton Philips, Chief Executive Officer, said:

"I am extremely encouraged by the strong start to the year for our business.
Our manufactured like for like volume growth of 0.5% in the quarter, continued
to outperform the market in the key categories in which we operate. This
performance has once again been supported by our outstanding operational
service levels to ensure availability of products to our customers. Our focus
as a team is to provide fresh and healthy foods to our customers and consumers
each and every day.

Our progress as a business has been delivered through continued effective
operational and commercial initiatives, as detailed in November, this has
supported improved profit conversion and a strong profit outturn in the
quarter. We are committed to continuing to drive profitability through
commercial discipline and are investing in several initiatives to develop a
robust platform for future growth.

 

While we remain mindful of the seasonally important second half of the year,
we are confident that the Group will deliver a full year outturn in line with
current market expectations."

 

Greencore will report its FY24 interim results for the half year ending 29
March 2024 on 21 May 2024.

 

(1) Consensus FY24 market expectations of Adjusted Operating Profit range of
£80.5m to £85.0m, as compiled by Greencore from available analyst estimates
on 15 January 2024 and as reported in the Investor Relations section of the
Group website.

(2) Pro-Forma revenue growth (versus FY23) adjusts reported revenue in FY23 to
reflect the disposal of Trilby Trading Limited. Like for like revenue growth
(versus FY23) adjusts Pro forma revenue for business wins and losses.

(3) Volumes are on a like for like basis and adjust for business wins and
losses. Market performance in those categories, unless stated, is Circana data
for the 12 weeks to 24 December 2023.

(4) Kantar data based on 4 weeks to 24 December 2023.

 

For further information, please contact:

 Jonathan Solesbury  Interim Chief Financial Officer     Tel: +353 (0) 1 605 1000
 Curtis Armstrong    Finance Director - FP&A and IR      Tel: +44 (0) 1246 384649
 David Marshall      Head of Capital Markets             Tel: +353 (0) 1 605 1000

 Jonathan Neilan     FTI Consulting                      Tel: +353 (0) 86 231 4135
 Nick Hasell         FTI Consulting                      Tel: +44 (0) 203 727 1340

 

Forward‐looking statements

Certain statements made in this document are, or may be deemed to be,
forward‐looking.  These represent expectations for the Group's business,
and involve known and unknown risks and uncertainties, many of which are
beyond the Group's control.  The Group has based these forward‐looking
statements on current expectations and projections about future events based
on information currently available to the Group.  The forward-looking
statements contained in this document include statements relating to the
financial condition, results of operations, business, viability and future
performance of the Group and certain of the Group's plans and objectives.
These forward-looking statements include all statements that do not relate
only to historical or current facts and may generally, but not always, be
identified by the use of words such as 'will', 'aims', achieves',
'anticipates', 'continue', 'could', 'develop', 'should', 'expects', 'is
expected to', 'may', maintain', 'grow', 'estimates', 'ensure', 'believes',
'intends', 'projects', 'sustain', 'targets', or the negative thereof, or
similar future or conditional expressions, but their absence does not mean
that a statement is not forward-looking.

By their nature, forward-looking statements are prospective and involve risk
and uncertainty because they relate to events and depend on circumstances that
may or may not occur in the future and reflect the Group's current
expectations and assumptions as to such future events and circumstances that
may not prove accurate. A number of material factors could cause actual
results and developments to differ materially from those expressed or implied
by forward-looking statements. Investors should read the discussion of risk in
the Group's Annual Report and Financial Statements for the year ended 29
September 2023 issued on 28 November 2023. There may be risks and
uncertainties that the Group is unable to predict at this time or that the
Group currently does not expect to have a material adverse effect on its
business. None of the Company or any of its associates or Directors, officers
or advisers provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking
statements in this document will actually occur.  You should not place undue
reliance on any forward-looking statements. These forward-looking statements
are made as of the date of this announcement. The Group expressly disclaims
any obligation to publicly update or review these forward-looking statements,
whether as a result of new information, future events or otherwise, other than
as required by law.

About Greencore

We are a leading manufacturer of convenience food in the UK and our purpose is
to make every day taste better. We supply all of the major supermarkets in the
UK. We also supply convenience and travel retail outlets, discounters, coffee
shops, foodservice and other retailers. We have strong market positions in a
range of categories including sandwiches, salads, sushi, chilled snacking,
chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces
and pickles, and frozen Yorkshire Puddings. We have 16 world-class
manufacturing sites and 17 distribution centres in the UK, with
industry-leading technology and supply chain capabilities. We generated
revenues of £1.9bn in FY23 and employ 13,600 people. We are headquartered in
Dublin, Ireland.

 For further information go to www.greencore.com or follow Greencore on
social media.

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