A number of industry analysts have said that convenience foods giant Greencore should be in a strong position to bounce back post COVID-19, after the business posted a 14.3% pro forma decline in revenue in full-year 2019/20.
On a reported basis, revenue at the business was down 12.5% for the year, to £1.26 billion, while adjusted EBITDA fell by 40.1%.
Announcing its results, Greencore said that it plans to raise equity to the value of £90 million, which should "provide liquidity, leverage headroom and working capital to rebuild operations post COVID," commented Cathal Kenny, an analyst with Davy.
"The equity raise follows a challenging trading period through October and November as regional and national restrictions impeded volume recovery in the key food-to-go category," he said. "Headline FY 2020 results were pre-announced on October 5th and highlighted an improving trendline through Q4 in a more normalised environment."
'Agility And Capability'
Elsewhere, Clive Black of Shore Capital welcomed the steps that Greencore is taking "in the most challenging of trading contexts, times that require considerable agility and capability to adapt".
He said that these steps should enable the business to "bolster its liquidity", and "with the resources in place to prevent what could be damaging additional cost and capital control, the group can look forward to a post-vaccine CY2021 with confidence, returning to strong growth with enhanced operating capabilities (e.g. automation), strengthened market relevance and positions plus tools to broaden its reach by category and channel.
"After much challenge, we share Greencore’s confidence of an enhanced medium-term outlook in the face of current adversity; FY2019 trading activity levels could return in FY2022."
'Well Positioned'
For its part, Greencore said that while it expects COVID-19 to continue to have an uncertain impact on its business in the near term, it should be 'well positioned to take advantage of recovering trading conditions as they occur'.
"Despite the ongoing uncertainty, we have still been able to secure new business and extend our product range during FY20, and our other convenience categories have delivered a solid performance," commented chief executive Patrick Coveney. "Furthermore, our relationships with our customers are stronger than ever before, having worked in close collaboration with them throughout the pandemic, and they remain firmly committed to the categories in which we operate.
"As such, notwithstanding the near-term challenges, we are optimistic about the medium-term prospects for Greencore.”
Elsewhere, Greencore has announced a new sustainability strategy, built around three core pillars, Sourcing with Integrity, Making with Care, and Feeding with Pride, which will be 'supported by specific milestone targets and short term actions that relate to the most material sustainability challenges, risks and opportunities facing the business'.
It will not be proceeding with a final full-year 2020 or an interim 2021 dividend payment, it noted.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
