Greencore reports strong revenues in first quarter

Greencore Group plc recorded revenue of £417.0m (€487m) in the 13 weeks to December 30, 2017, an increase of 17.1% on the prior year on a reported basis.

On a like-for-like basis (expressed in this statement on a constant currency basis and excluding revenue from The Sandwich Factory acquisition in July 2016), the Group reported revenue to be ahead by 9.1% in the quarter.

Greencore’s Convenience Foods division recorded first quarter revenue of £401.6m (€468m), 16.4% ahead of the prior year on a reported basis and up 8.9% on a like-for-like basis.

In the UK, first quarter revenue was up 13.9% on a reported basis and up 9.0% on a like-for-like basis (after excluding the revenue from The Sandwich Factory acquisition).

This growth is attributed by strong growth in Greencore’s Food to Go business, which continues to benefit from robust category growth and from the roll-out of business wins announced in FY16.

The Group continues to invest for future growth, with construction of the final new facility in Northampton has been completed, with the commissioning of this facility progressing well.

In Prepared Meals, Greencore is investing significantly in capacity and capability in both its Wisbech and Warrington ready meal facilities, to support renewed contracts in that business.

In the US, reported revenue in the first quarter was up 31.2%, and up 8.0% on a like-for-like basis (after adjusting for currency), driven largely by the addition of operations in Seattle.

The business continues to progress year-on-year, benefiting from an improved operational performance. The company’s focus now is on delivering new revenue growth to drive capacity utilisation and margin progression.

Ingredients and Property

The Ingredients and Property division, which now represents less than 5% of Group revenue, recorded revenues of £15.4m (€18m)in the first quarter, £4.5m (€5.2m) or 41.3% higher on a reported basis and 16.5% higher on a like-for-like (or constant currency) basis.

This growth has been positively impacted by increasing demand in the global dairy markets, according to Greencore.

US Integration

The acquisition of Peacock Foods completed on December 30, 2016. Trading in the Peacock Foods business was in line with expectations upon completion.

Greencore is to provide a more detailed update on the integration of its US businesses, including progress on the combined commercial agenda, at our half year results announcement on May 23.

Outlook

The Group continues to deliver strong revenue growth in both the UK and US, reflecting positive category growth and the roll-out of new business wins.

The integration of Peacock Foods in the US and the related synergy delivery is on track, albeit the process is at an early stage.

Inflation in raw material and packaging prices and labour costs are expected to increase for the remainder of the year, although Greencore anticipates that the combination of supply chain, purchasing and pricing initiatives will mitigate these impacts.

Overall, the business is delivering a complex investment and change agenda to drive both the US integration and the new capacity additions that support the significant new business in the UK, the Group said.

Notwithstanding these investment costs and their impact on the phasing of profit delivery, Greencore remains confident in its ability to deliver FY17 performance in line with market expectations.

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