Group well positioned to drive future growth and sustainable returns in core UK market
Greencore Group plc (‘Greencore’ or the ‘Group’), a leading manufacturer of convenience food in the UK, today issues its results for the year ending 28 September 2018.
- FY18 Adjusted EPS of 15.1p, in line with previously announced guidance 14.7p-15.7p 3
- US business results presented as discontinued operations following the disposal of the business for $1,075m
- Plan to return £509m of capital to shareholders by way of tender offer
- Pro Forma full year revenue growth of 8.7% in continuing operations
- Adjusted Operating Profit growth of 1.7% in continuing operations, weighted to the second half of the year
- Net Debt reduction of £18.1m to £501.1m, driven by a £14.4m increase in Free Cash Flow
- ROIC of 15.6% (FY17: 16.0%) generated in continuing operations, improving as year progressed
- Well positioned to capitalise on industry leading position and drive profitability and returns in core UK market
SUMMARY FINANCIAL PERFORMANCE
|Adjusted Operating Profit||104.6||102.9||+1.7%|
|Adjusted Operating Margin||7.0%||7.2%||-20 bps|
|Adjusted Profit Before Tax||79.6||80.1||-0.6%|
|Exceptional Items (before tax)||(52.2)||(53.2)|
|Group Operating Profit||49.8||45.5||+9.5%|
|Profit before taxation||17.8||15.8||+12.7%|
|Return on Invested Capital (“ROIC”)||15.6%||16.0%||-40 bps|
|Adjusted EPS (pence)||15.1||15.4||-1.9%|
|Basic EPS (pence)||4.8||1.9||+152.6%|
|Total proposed dividend per share (pence)||5.57||5.47||+1.8%|
|Operating Cash Flow||136.6||117.8||+£18.8m|
|Free Cash Flow||92.4||78.0||+£14.4m|
|Net Debt:EBITDA as per financing agreements||2.3x||2.4x|
Commenting on the results, Patrick Coveney, Chief Executive Officer, said:
“2018 was a year of significant change for Greencore. We delivered good underlying growth in the UK, with favourable consumer and retailer trends helping drive our core food to go business. After the financial year-end, we took the decision to sell our US business having received a compelling offer for it. We will now focus all of our attention and resources on the significant growth opportunities that we see in the UK, both organic and inorganic. Despite the short-term uncertainties of Brexit, our scale, depth and expertise in attractive and structurally growing food categories mean that we are confident in the future growth prospects for Greencore.”
1 The Group uses Alternative Performance Measures (‘APMs’) which are non-IFRS measures to monitor the performance of its operations and of the Group as a whole. These APMs along with their definitions are provided in the Appendix.
2 Continuing operations for FY17 and FY18 include central costs previously allocated to discontinued operations.
3 On 13 March 2018, the Group issued a profit forecast stating “For FY18 the Group now anticipates Adjusted EPS in the range of 14.7p-15.7p”. It subsequently confirmed that guidance on 22 May 2018, 31 July 2018 and 15 October 2018. Actual FY18 Adjusted EPS was 15.1p, which was in line with the previously announced guidance.
4 Market/category growth rates are based on various Nielsen data for the 52 weeks to 6 October 2018.
Following the sale of its US business, Greencore is committed to the prompt and efficient return of £509m of the transaction proceeds to shareholders (the ‘Capital Return’). After a consultation exercise with shareholders in recent weeks, the Group notes the preference of many of its shareholders to be offered a choice regarding their participation in the proposed Capital Return.
Taking these views into account, alongside the focus on an efficient return of capital, the Group intends to implement the Capital Return via a tender offer to all shareholders for up to £509 million (the “Tender Offer”). To the extent the full Capital Return is not effected through the Tender Offer, the Group intends to return any remaining proceeds shortly thereafter, anticipated to be by way of a special dividend.
Further information on the Tender Offer will be provided in a circular to Greencore shareholders. The Company will finalise the full details, including discussions with the relevant tax authorities, and will publish the circular as soon as practicable. The Capital Return is expected to be completed during the second quarter of FY19.
The disposal of the Group’s US business was completed on 25 November 2018. Its performance in FY19 will be presented as discontinued operations. The financial impact of the net proceeds, the associated capital return and leverage reduction, will all be included in the performance of the continuing operations.
The Group entered FY19 with a stronger and leaner business in the UK following the refinement of its portfolio and the implementation of its streamlining and efficiency programme. The Group anticipates continued underlying revenue growth in its key convenience food categories. Adjusted Operating Profit growth will be driven by this revenue growth, improved operational performance, and by a planned review of central overheads. Although the Group believes the risks from Brexit are manageable in the medium-term, the near-term challenges associated with a ‘no withdrawal agreement’ are uncertain. A strengthened balance sheet and strong underlying free cash generation leaves the Group well positioned to consider organic and inorganic investment consistent with its strategic and returns objectives.
Over the medium term, the Group expects that its market positioning, capability set, customer profile, well invested asset network and proven economic model will generate strong growth, cash generation and returns.
Basis of preparation
The financial information included within this Results Statement has been extracted from the audited consolidated financial statements of Greencore Group plc. Details of the basis of preparation can be found in Note 1 to the attached financial information.
Certain statements made in this document are 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. These forward-looking statements may generally, but not always, be identified by the use of words such as “will”, “aims”, “anticipates”, “continue”, “could”, “should”, “expects”, “is expected to”, “may”, “estimates”, “believes”, “intends”, “projects”, “targets”, or the negative thereof, or similar expressions.
By their nature, forward-looking statements 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. You should not place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this full year results statement. The Group expressly disclaims any obligation to publicly update or review these forward-looking statements other than as required by law.
A presentation of the results for analysts and institutional investors will take place at 9.00am today at the Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED. This presentation can also be accessed live from the Investor Relations section on www.greencore.com or alternatively via conference call.
Participants wishing to dial into the conference call can do so using the following details:
|Ireland number:||+353 (0)1 246 5621|
|UK number:||+44 (0)33 0336 9411|
|US number:||+1 929 477 0402|
A replay of the presentation will be available on www.greencore.com and also through a 7 day conference call replay facility.
|Ireland replay number:||+353 (0)1 533 9810|
|UK replay number:||+44 (0)20 7660 0134|
|US replay number:||+1 719 457 0820|
For further information, please contact:
|Patrick Coveney||Chief Executive Officer||Tel: +353 (0) 1 486 3313|
|Eoin Tonge||Chief Financial Officer||Tel: +353 (0) 1 486 3316|
|Jack Gorman||Head of Investor Relations||Tel: +353 (0) 1 486 3308|
|Rob Greening or Sam Austrums||Powerscourt||Tel: +44 (0) 20 7250 1446|
|Billy Murphy or Louise Walsh||Drury | Porter Novelli||Tel: +353 (0) 1 260 5000|
- A leading manufacturer of convenience food in the UK
- Strong market positions in many UK convenience food categories including sandwiches, sushi, salads, chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces & pickles, and frozen Yorkshire Puddings
- Greencore is headquartered in Dublin, Ireland and employs approximately 11,300 people
- For more information go to www.greencore.com or follow Greencore on social media