Resilient Q3 performance in challenging conditions
Greencore Group plc (“Greencore’’ or “the Group”), a leading manufacturer of convenience foods in the UK, today issues a trading update covering the 13 weeks to 28 June 2019 (“Q3” or “the quarter”).
Quarter 3 and Year to Date Trading1,2
| Revenue Growth | ||||
| Q3 | Year to Date | |||
| Reported | Pro forma | Reported | Pro forma | |
| Group – continuing operations | -2.9% | +0.8% | -4.0% | +3.8% |
| Food to go categories | +0.6% | +0.6% | +4.6% | +4.6% |
| Other convenience food categories | -9.8% | +1.4% | -16.9% | +2.3% |
Greencore delivered a solid performance in a challenging quarter for the UK grocery sector.
Reported revenue from continuing operations was £365.0m in Q3, a decrease of 2.9% on the prior year primarily reflecting the impact of site disposals and business exits (Hull, Evercreech, and Kiveton ready meals). On a pro forma basis, revenue increased by 0.8% in the quarter.
Year to date, the Group’s reported revenue from continuing operations was £1,066.4m, a decrease of 4.0% on the prior year on a reported basis. On a pro forma basis, revenue increased by 3.8%.
In the Group’s food to go categories, reported revenue was £250.6m in Q3, an increase of 0.6% on both a pro forma and reported basis, all driven by underlying product revenue growth. This growth reflected weak market conditions with unseasonal weather, a varied trading performance across the customer portfolio, set against a strong comparative period. Year to date, reported revenue in food to go categories was £697.8m, an increase of 4.6% on both a pro forma and reported basis.
Reported revenue in the Group’s other convenience food categories totalled £114.3m in Q3, an increase of 1.4% on a pro forma basis, and a 9.8% reduction on a reported basis again reflecting the impact of site disposals and business exits. Year to Date, reported revenue was £368.6m, an increase of 2.3% on a pro forma basis and a 16.9% reduction as reported.
Underlying free cash generation for the Group in Q3 was in line with expectations.
Outlook
The Group is performing well against its strategic and financial objectives, despite the soft underlying revenue growth in Q3. The final quarter represents a seasonally important period for Greencore and the Group continues to anticipate growth in Adjusted Operating Profit for the full year supported by underlying revenue growth and a good operational performance.
In addition, the Group anticipates that FY19 Net Debt:EBITDA, as measured under financing agreements, will be at the lower end of its medium term target range of between 1.5x to 2.0x.
Greencore will report its FY19 results on 26 November 2019.
