Greencore Group plc, a manufacturer of convenience food in the UK has reported a stronger than expected financial performance and a positive outlook as the group heads towards 2025
The company has issued its results for the 52-week period ended September 27, 2024.
While group revenue saw a 5.6% drop between 2023 and 2024 decreasing from £1.91 billion for the financial year (FY23) in 2023 to £1.8 billion a year later, the group operating profit did increase by 15.7%.
The group also saw Like-for-Like (LFL) volume growth ahead of the wider market driven by a strong performance in key categories and gross margin improvement to 33.2% in FY24, up 350 basis points from 29.7% in FY23
It delivered Adjusted Operating Profit of £97.5 million in FY24, up 27.8%, with +140bps of margin improvement to 5.4%.
Following the commitment to return £50 million to shareholders in May 2024, Greencore returned £40 million to shareholders via share buybacks in FY24 and today (Tuesday, December 3) announced the reintroduction of a dividend.
The proposed FY24 dividend of 2.0p per share (FY23: nil) will be payable on February 6, 2025.
The financial results reveal that given the group’s strong balance sheet and confidence in the outlook, the Greencore group is today announcing the launch of an additional £10 million share buyback.
Greencore operations
The financial results state that there was outstanding operational service levels of 99.2% achieved in FY24.
There were also several customer contract renewals in FY24 providing what the company has described as “a solid multi-year platform”.
A new large ready meals contract was successfully implemented at the Kiveton site in late Q4 FY24 and also completed consolidation of the soups business into a single site providing efficiency gains for the company.
Among the other notable elements of the financial results was confirmation of agreement with UK Trustees to cease £9.8 million in annual UK pension funding contributions when fully funded position is achieved.
Outlook
Building on a strong FY24 performance and the ongoing execution of ‘Horizon 2’, Greencore said it has developed a leaner, more agile and efficient operating platform.
This is driving innovations across its categories for both customers and the UK consumer. It has also accelerated profit recovery and enhanced the group’s returns profile
Although it is early in the year and being mindful of the significant labour cost headwind announced in the UK Budget, Greencore has stated that it is encouraged by the business’s underlying momentum.
The group plans to offset the additional labour costs fully via further efficiency initiatives, alongside its usual inflation recovery measures in FY25.
As a result, the group anticipates FY25 Adjusted Operating Profit to be within the top half of the range of current market expectations.
Greencore chief executive officer, Dalton Philips said: “The group delivered excellent progress against its key financial metrics and strategic priorities in FY24, underpinned by close customer engagement in a period that continued to be defined by cost inflation and muted consumer confidence.
“I would like to thank all our Greencore colleagues whose continued dedication has enabled us to deliver these results. Over the last 12 months we have remained focused on making high quality food, rebuilding our profitability, and positioning Greencore to be known as the UK’s leading convenience foods manufacturer.
“The group has maintained its strong financial discipline, with leverage reduced to 1.0x, while also returning a further £40 million to shareholders and announcing an additional share buyback.
“I am also delighted that today marks a return to Greencore paying dividends. The strength of our balance sheet will provide us with the ability to invest in the growth and efficiency of our business and to pursue M&A opportunities on a selective basis, while also enabling us to deliver increasing returns to shareholders,” he said.