Greencore on course to meet earnings estimates for current year

Greencore expects to meet earnings estimates for its current financial year, after showing better-than-expected underlying growth in its first half.

The Dublin-headquartered convenience food group yesterday reported strong figures — for the six months to the end of March — with revenue up by 8.2%, year-on-year, to £619.8m (€761m) and adjusted pre-tax profits rising by over 20% to £30.7m.

Group operating profit was reported at £37.2m, up by 14% on the corresponding period the previous year, with adjusted earnings per share ahead by nearly 19% at 7p. The underlying figures were ahead of most analyst estimates.

However, total pre-tax profits shrank by over £4m, to £8m, and operating profits fell from £20.4m to £16.7m after a number or exceptional items were taken into account. These included a non-cash impairment charge, of nearly £6m, associated with the sale of the group’s Ministry of Cake business in the UK; a restructuring charge relating to its US operations; integration costs relating to its takeover of Uniq in Britain; an exceptional tax credit and a £9.2m property-related charge regarding its Irish portfolio. Overall, net exceptional charges of £12.6m — of which, £10m relates to non-cash items — was recognised in the first half.

Overall, however, strong growth was evident in each of the group’s key markets. In the core UK market, convenience food sales were up by 9.6% — on a like-for-like basis — at £587.9m, driven by healthy growth in sandwiches and the broader food-to-go category, which represents around 40% of convenience food revenues. In prepared meals, which was heavily hit by last year’s horsemeat scandal, 0.3% year-on-year revenue growth was seen in the first half, with management hoping growth will gradually improve.

Greencore’s food-to-go business will be further boosted by a newly announced £30m multi-year investment in its existing facilities in Northampton, which will service a new contract win for chilled sandwiches.

Chief executive, Patrick Coveney said the overall business delivered “a strong first half performance” and said, despite, a tougher second half comparison to live up to, full-year revenue and earnings targets should be met.