Solid financial and operational performance in Q3; on track to deliver full year results in line with current market expectations
Greencore Group plc (‘Greencore’ or the ‘Group’), a leading manufacturer of convenience foods in the UK, today issues its trading update for the 13 weeks ended 30 June 2023 (“Q3” or “the quarter”).
|Revenue||Revenue Growth (versus FY22)|
|£m||Reported||Pro Forma(1)||Reported||Pro Forma(1)|
|Food to go categories||335.3||+0.6%||+8.1%||+9.6%||+12.7%|
|Other convenience categories||160.1||+4.7%||+12.1%||+19.9%||+22.4%|
1 Pro Forma Revenue Growth (versus FY22) adjusts reported revenue to exclude the additional week of trading in FY22 accounting period. It also presents the revenue on a constant currency basis utilising FY22 FX rates on FY23 reported revenue.
- Greencore delivered a solid financial and operational performance in Q3 FY23, underpinned by outstanding customer service levels and the ongoing resilience of the categories in which it operates.
- Group reported revenue increased in Q3 FY23 by 1.9% to £495.4m. On a Pro Forma basis revenue grew by 9.3% with the increase driven by a combination of inflation recovery and underlying volume growth, supported by the contribution from new customer wins. Across the Group, manufactured volume growth in the quarter was +0.9%.
- Q3 FY23 reported revenue in food to go categories increased by 0.6% to £335.3m with Pro Forma revenue growth of 8.1%. The increase was primarily due to inflation recovery, in addition to food to go manufactured volumes being 2.0% ahead of Q3 FY22. Revenue from the distribution of third-party products was approximately 1% ahead of the prior year due to higher volumes.
- Q3 FY23 reported revenue in other convenience categories was £160.1m, a 4.7% increase year-on-year. On a Pro Forma basis this represented a 12.1% increase. The improvement was largely due to inflation recovery, the on-boarding of new business wins in ready meals coupled with a strong performance across ambient sauces. Underlying ready meals volumes in the quarter were 2.6% lower net of new business wins.
- Cost inflation continues to be managed through ongoing recovery and other mitigating actions, although the rate of inflation in some areas is now beginning to slow.
- Profit conversion and underlying free cash generation in Q3 FY23 were in line with management expectations and underpinned by on-going operational and commercial initiatives.
- The Group continues to expect to generate an FY23 outturn in line with current market expectations. Q4 FY23 represents a seasonally important period for Greencore and the Group anticipates delivering year-on-year profit and cashflow progression in the second half of the year.
- In addition, the Group expects that FY23 Net Debt:EBITDA, as measured under the financing agreements, will be within the range of its medium term target of between 1.0x to 1.5x.
2 Consensus FY23 market expectations of mean Adjusted Operating Profit of £70.0m, mean Adjusted EPS of 7.8p, and mean Net Debt (excluding lease liabilities) of £188.6m, as compiled by Greencore from available analyst estimates on 14 July 2023 and as reported in the Investor Relations section of the Group website.
Commenting on the performance, Dalton Philips, Chief Executive Officer, said:
“I am encouraged by the progress made during the third quarter and that manufactured volume growth is continuing to support our top line momentum. This clearly illustrates the underlying demand for the categories in which we operate, as well as Greencore’s resilience in the current difficult consumer spending environment.
The food to go category remains hugely relevant to consumers as they contend with the cost-of living crisis, and it is particularly notable that 52% of supermarket sandwiches are now bought as part of a meal deal, up from 46% this time last year. We are delighted that our core category is playing such a key role in feeding the UK, and in a way that represents such good value.
As we enter the fourth quarter, which is a seasonally important trading period for the business, we remain confident that the Group will deliver a full year outturn in line with current market expectations.
As outlined at the interim results in May, our priority in the near-term is to rebuild profitability and returns to create a platform on which to build for future growth”.
Greencore will report its FY23 results for the year ending 29 September 2023 on 28 November 2023.