Convenience food operator Greencore has reported a 4.8% increase in group revenue, to £1.32 billion (€1.55 billion) in its full year to 24 September, with CEO Patrick Coveney saying the group has "weathered the storm and emerged strongly from a difficult period".
Adjusted operating profit for the period was up 20% to £39 million (€45.9 million), the company said, while adjusted operating margin in the second half of the year stood at 5.2%.
The group cited new business wins as a core driver of its recovery, with this contributing more than a third of the 38% pro-forma revenue growth in the fourth quarter, as well as continuing to support its diversification drive.
'Good Progress In Rebuilding Revenues'
"Following a challenging first half in FY21, we made good progress in rebuilding revenues, cashflows and profitability in H2 and are confident of maintaining this positive trajectory in the year ahead, particularly in the seasonally important second half," Coveney, who recently announced he would be stepping down as chief executive next year, said in a statement.
"The strong recovery of the UK food to go market, as well as solid performance in other convenience food categories, underpins this confidence. New business wins achieved last year are contributing to our momentum, and we anticipate delivery of profits for the year ahead in line with current market expectations."
Greencore said that trading to date in full-year 2022 has been 'encouraging', with positive revenue momentum seen in all aspects of the business.
Input Cost Inflation
In terms of input cost inflation, the group said that it is 'progressing well' in tackling this challenge, while it also noted that the pace of profit conversion continues to be impacted by supply chain and labour challenges across the wider industry.
It said that it expects to generate a FY22 outturn 'in line with current market expectations', providing there is no significant return to mobility restrictions or lockdowns as a result of increased COVID infection rates.
"With strong free cashflow and a significant reduction in leverage achieved in FY21, the Group enters the new financial year on a robust financial footing," Coveney added.
"Greencore has a strong position in the dynamic UK convenience food market and, with demand remaining strong in the early stages of FY22, has confidence in its medium-term prospects.”
Analyst Viewpoint
Commenting on the group's performance, Roland French of Davy said, "Adjusted operating profit was broadly in line with expectations. The statement notes top-line momentum in the key food-to-go category, although with margin friction a consequence of unprecedented supply chain challenges.
"All else equal, the FY 2022 out-turn is expected to be in line with current expectations (Davy: £77.9m) and thus we envisage no material changes to our forecasts. The suggested return of surplus capital to shareholders is noteworthy."
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