Greencore PLC: announces strong results in Full Year and Q4-2022

Dublin / IE. (gg) Greencore Group PLC, a leading manufacturer of convenience food in the UK, issues its results for the 53 weeks ended 30 September 2022.

Performance

• Strong growth in food to go and other convenience categories drove Group Revenue growth of 31.3 per cent above FY-2021 levels to GBP 1.7bn and 20.3 per cent above FY-2019 levels
• Pro Forma Revenue growth in food to go categories increased by 35.2 per cent year on year, driven by a combination of strong underlying volume growth, contribution from new wins, and increased pricing as we continued to recover inflation
• Pro Forma Revenue growth in other convenience categories increased by 19.2 per cent, driven by increased underlying pricing and higher revenue in the Group’s Irish ingredients trading business
• Significant growth in Adjusted Operating Profit, in line with previous guidance, up GBP 33.2m to GBP 72.2m (FY-2021: GBP 39.0m), with Adjusted Operating Margin of 4.2 per cent (FY-2021: 2.9 per cent)
• Group ROIC increased to 8.4 per cent from 4.5 per cent at the end of FY-2021 due to the increase in Operating Profit
• Adjusted EPS of 9.2p up 5.5p (FY-2021: 3.7p)
• Net Debt (excluding lease liabilities) of GBP 180.0m at year end (FY-2021: GBP 183.1m) after GBP 33.1m strategic capex and GBP 8.8m share buyback completed during the year
• Robust balance sheet with substantial liquidity headroom and continued progress on deleveraging. Net Debt: Ebitda of 1.5x as measured under financing agreements has now reached the Group’s target range of 1.0x – 1.5x. Committed facilities of GBP 578.0m (FY-2021: GBP 433.6m)
• Completed GBP 10m share buyback programme in early October which is the first phase of the GBP 50m value return to shareholders announced in May 2022. Intention to return a further GBP 15m of value to shareholders in the form of a share buyback in FY-2023

Operating + Strategic Update

• Maintained high operational service levels during the year, working closely with our customers and supply partners to manage ongoing supply-side challenges and disruptions
• Completed onboarding of new business wins, expanding the Group’s product ranges and channel reach. New business wins accounted for approximately 4.4 per cent of the Group’s pro forma revenue growth in FY-2022
• Recovered or mitigated all FY-2022 input cost and other inflation
• Completed strategic capital investment programme to support the delivery of previously announced business wins. There are some commissioning challenges as we ramp up production and we are working to resolve these in the first half of FY-2023
• Launched Better Greencore, our change programme with the first phase targeted to deliver annual recurring benefits of approximately GBP 30m in FY24. The second phase, focusing on operational and technological excellence, will be launched in FY-2023. The Group recognised an exceptional charge of GBP 16.1m in respect of the work carried out in the financial year
• Advanced our sustainability agenda relating to the data and systems framework to measure performance effectively. The Group also commenced a collaboration project with a key customer on category level eco-footprinting

Outlook

Revenue performance in the early weeks of FY-2023 has broadly held up however, we do note some mix effect between categories. We remain cautious about the potential impact of the recessionary environment and cost-of-living factors on consumer spending through the year ahead, the impact of which has not yet been fully absorbed by the consumer.

We expect that FY-2023 will be a year of further substantial inflation and are working closely with our customers on recovery and mitigation. We remain focused on the execution of our change programme, Better Greencore, and are planning for the second phase which will focus on operational and technological excellence.

We continue to make decisions on customer contracts which are no longer economic, with a heightened focus on our ability to recover inflation.

The Board is confident that a continued focus on the strengths of the business, underpinned by our resilient balance sheet and the efficiency and productivity gains related to our Better Greencore programme will support the further successful progress of the Group in the years ahead.