Greencore shares surge as profit target raised on lifted restrictions

Quarterly revenues were up by over 53% on the same period last year and down only 2.8% on the corresponding period in 2019

Greencore chief executive Patrick Coveney said the group is confident of seeing further profit improvement this year on the back of a strong third quarter.

Greencore shares jumped as much as 4% as the Irish-based sandwiches, salads, and wraps maker said it expects better-than-anticipated profits this year on the back of its core markets of the UK and Ireland emerging from Covid restrictions.

Greencore said it saw a “strong improvement” in trading in the three months to the end of June, which cover the third quarter of its financial year. 

It said quarterly revenues were up by over 53% on the same period last year and, more importantly, down only 2.8% on the corresponding period in 2019. Revenue amounted to £360.2m (€421m).

The food group said it now expects to generate adjusted operating profits of between £36m and £40m (€42m and €47m) for the 12 months to the end of September. 

It previously guided for a profit above its previous year total of £32.5m.

Greencore’s main market is the ‘food-to-go’ sector in the UK. 

The Irish group is the largest maker of pre-packed sandwiches in Britain and is a key supplier to the likes of Tesco, Marks and Spencer, Waitrose, and Sainsbury’s.

The third quarter performance was driven by the easing of Covid restrictions — especially in the UK — and a number of new business wins. 

The group’s core ‘food-to-go’ segment – largely comprising busy consumers and office workers grabbing pre-packed product — saw revenues falling just 7% short of pre-Covid levels. 

However, that was helped by new contract wins. Without these, ‘food-to-go’ revenues would still be around 15% lower than before Covid hit.

Chief executive Patrick Coveney said the group was encouraged by the improvement in revenue, profitability, and cash flow momentum in the third quarter and the early weeks of the fourth quarter.

“Against the backdrop of the UK economy reopening fully, we are rebuilding our economic model effectively and sustainably with all stakeholders, supported by our long-standing customer relationships and further enhanced by the new business wins we have secured this year,” Mr Coveney said.

Greencore said that notwithstanding supply chain and labour market challenges currently impacting the UK food industry, it is confident of delivering strong year-on-year profit and cashflow “progression” in the second half of its financial year.