Greggs PLC: Sales up but profits show fall

Newcastle upon Tyne / UK. (gplc) Greggs PLC has blamed the rising cost of ingredients and energy for a 3,3 percent fall in full-year pre-tax profits. The company said it expected such costs to ease this year but only expected sales growth this year to be «marginally positive». Greggs took a 3,7 million GBP charge after selling its ten stores in Belgium. It is also taking a restructuring charge for rebranding its remaining Bakers Oven stores as Greggs.

The company said that in the ten weeks to March 07, like-for-like sales, which exclude new stores, had risen by one percent. «The first two weeks of February were significantly impacted by the snow that affected most of the United Kingdom. Excluding these two weeks like-for-like sales have increased by 2,9 percent», the company said. Some key facts:

• 24th consecutive year of dividend growth
• Like-for-like sales up 4,4 percent despite increasingly difficult economic climate
• Smooth transition to new Chief Executive achieved
• Ten for one share split proposed
• Focus on simplifying the business in 2009

Key Financials

	2008 (1)	Change (1)	2008 (2)	Change (2)
Sales	628,0 million GBP	+7,1%	628,0 million GBP	+7,1%
Operating profit	044,3 million GBP	-7,2%	048,6 million GBP	-2,6%
Pre-tax profit	045,2 million GBP	-7,8%	049,5 million GBP	-3,3%
Diluted earnings per share	306,1 Pence	-4,3%	335,4 Pence	-1,5%
Dividends per share	149,0 Pence	+6,4%	149,0 Pence	+6,4%
(1): Before property gains, restructuring costs and pension credit (2): After property gains, restructuring costs and pension credit

«This was a challenging year for Greggs, as we bore substantial increases in energy and ingredient costs in a period of fragile and declining consumer confidence. Our ability to achieve sustained like-for-like growth under these difficult conditions affirmed the fundamental strengths of the Greggs proposition; our reputation for quality, value and freshness is a great asset as consumers face tough times. During the year we achieved a smooth transition in the leadership of the Company and furthered our plans to simplify the business to prepare for accelerated expansion from 2010. Our cash-positive balance sheet and continuing cash generation mean that we are strongly placed to exploit the considerable opportunities for future growth» – said Derek Netherton, Chairman of Greggs PLC in London.

Info: Preliminary results for the 52 weeks ended 27 December 2008 (PDF | 18 pages)