Greencore PLC: announces Q1-2022 Trading Update

Dublin / IE. (gg) Greencore Group PLC, a leading manufacturer of convenience food in the UK, issues a trading update covering the 13 weeks to 24 December 2021 (Q1-2022).

First Quarter Trading

Revenue Growth (versus Q1-2021) Growth (versus Q1-2019)
mio.GBP Reported Pro forma Pro forma
Group 389.0 mio.GBP +24.4% +26.4% +7.5%
Food to go categories 254.3 mio.GBP +34.9% +34.9% +6.1%
Other convenience food categories 134.7 mio.GBP +8.5% +13.1% +10.3%

Performance

  • Group reported revenue increased by 24.4 percent year on year, driven by strong growth in food to go categories and notwithstanding some limited impact on demand from the emergence of the Omicron Covid-19 variant in the UK during December. Pro forma revenue grew by 26.4 percent year on year and was 7.5 percent above equivalent pre-Covid levels in Q1-2019
  • Pro forma revenue in food to go categories increased by 34.9 percent year on year and was 6.1 percent above equivalent pre-Covid levels in Q1-2019. The underlying recovery in food to go categories continued in the period, and was augmented by the onboarding of new business wins, continued growth in the distribution component of the Group’s business, and the emerging impact of inflation
  • Pro forma revenue growth in other convenience categories was 13.1 percent year on year and 10.3 percent above equivalent pre-Covid levels in Q1-2019
  • In the quarter the Group continued to progress well with the recovery of input cost and other inflation with customers. The pace of profit conversion continued to be impacted by industry wide supply chain and labour challenges

Strategic Developments

  • The Group is on track with its strategic capital investment programme of approximately GBP 30m across three existing manufacturing sites, to support the delivery of previously announced business wins. Revenue from these wins is anticipated to begin in the second half of FY-2022
  • The return to pre-Covid volume levels has enabled the Group to revitalise its Excellence cost efficiency programmes across operational and commercial functions. These programmes enable the Group to optimise capacity utilisation, enhance process engineering and make further progress with automation initiatives. This will be augmented by an extensive review of costs across the Group that will also drive the recovery in profit conversion from the growing revenue base. More detail will be provided on this review in the Group’s H1-2022 Results
  • In November 2021 the Group further strengthened its balance sheet when it extended the maturity on its GBP 340m revolving credit facility by one year to January 2026. This increased the weighted average maturity of the Group’s total committed debt facilities to 3.4 years, from 2.7 years at the end of FY-2021
  • The Group continued to advance its sustainability agenda in Q1, including increasing engagement with suppliers on carbon intensive ingredients and progressing plans to transparently share data on the health and sustainability profile of its products with stakeholders
  • The Group has also introduced a new share ownership scheme for all colleagues, details of which are provided in a separate announcement this morning
  • The search process to appoint a new CEO is ongoing and an update on the appointment will be provided in due course

Outlook

  • The uncertainty regarding the duration and impact of Covid-19 variants on the Group’s trading environment, particularly on demand in its food to go categories, has made it more difficult to predict FY-2022 performance. To date, there has been some impact on the Group’s revenue momentum in what is its seasonally quieter period of the year. The Group welcomes the UK Government’s recent announcement to ease the «Plan B» restrictions on mobility arising from the Omicron Covid-19 variant
  • The Group is committed to the recovery of input cost and other inflation with customers, with the scale of this inflation increasing again in recent months. Supply chain and labour challenges remain elevated across the UK food industry, exacerbated by the impact of the Omicron Covid-19 variant
  • Though these challenges persist, the Group continues to anticipate a FY-2022 outturn in line with market expectations. This assumes no material resumption of mobility restrictions or lockdowns arising from increasing Covid-19 infection rates in the UK. Profitability will be heavily weighted towards the seasonally important second half of the year
  • The Group is focussed on further deleveraging the balance sheet in FY-2022. The Board also remains committed to recommencing value return to shareholders in FY-2022
  • Greencore will report its H1-2022 results on 24 May 2022

Chief Executive’s Statement

Commenting on the results, Gary Kennedy, Board Chair, said: «I am encouraged by the progress that we have made during Q1 in what continued to be a challenging trading environment. We remain focused on rebuilding our economic model effectively and sustainably with all stakeholders, thereby positioning the company for a strong future.»

bakenet:eu
Back to top