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Strong Financial Performance By Greencore Group

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Strong Financial Performance By Greencore Group

Strong Financial Performance By Greencore Group
November 15
09:57 2016

Greencore Group, the Dublin-based international convenience food manufacturer, has reported double-digit increases in both revenue and profits for the year ended 30 September 2016 with its food to go businesses in the UK and the US continuing to drive growth. Group revenue rose by 10.6% to £1.482 billion, and was up 5.9% on a like-for-like basis. EBITDA jumped 13.9% to £138.4 million and group operating profit increased by 11.2% to £102.0 million as operating margin improved by 10 bps to 6.9%.

Greencore’s UK Food to Go business strengthened its position in the market through market share gains, continued underlying growth, and capability and capacity enhancement, all supported by its strong customer partnership model. The rest of the UK portfolio, encompassing chilled prepared meals, chilled soups and sauces, ambient sauces & pickles, cakes & desserts and Yorkshire Puddings, also performed well in challenging markets.

UK Food to Go Business

The UK Food to Go division delivered like-for-like revenue growth of 12.3%. Over the last five years, the business has organically grown its share of sandwiches in the grocery channel from 36% to 59%. It has concluded long-term sole supply arrangements with many of its key customers, and has also invested heavily in capacity in order to support its ongoing growth. During Greencore’s 2016 financial year, the division began the commissioning of a new sandwich facility in Northampton and also completed construction of a new sushi facility on the same campus. The business added further production lines at its two London sites in order to support the roll-out of a multi-year, sole supply agreement with a major customer.

GreencoreFoodToGoDuring the last eighteen months, Greencore has relocated its principal northern and southern food to go picking and distribution hubs to larger facilities and at the same time has also introduced more automated processes. This has enabled the group to offer a wider range of distribution solutions to its customers and significantly grow the volumes of products distributed direct to store. Greencore is also investing in its IT infrastructure and its enterprise resource planning solutions to build a scalable, resilient platform to support future performance and growth.

In July 2016, Greencore acquired The Sandwich Factory from Cranswick for a headline consideration of £15 million. The business extends Greencore’s presence outside of its current core business with large grocery customers. The facility also offers an opportunity to modestly increase overall capacity across the Food to Go network and has also brought new capabilities in short-run, specialist product formats.

Expansion in the US

Greencore’s US business has progressed through a significant build phase, and now has substantial capacity for further growth. During the first half of 2016, the Rhode Island site was fully commissioned and the business has also opened a new facility in Seattle. Greencore’s US business moved into profit in the second half of 2016 with further progress expected in the 2017 financial year. Having completed the major capacity investments, the focus of the business now turns to developing the pipeline of future commercial opportunities.

Patrick Coveney, chief executive of Greencore.

Patrick Coveney, chief executive of Greencore.

Furthermore, Greencore is acquiring Peacock Foods, a fast-growing US convenience food manufacturer, for an enterprise value of $747.5 million (£594.3 million), to establish a scaled and profitable platform for future growth in the US.

Patrick Coveney, chief executive of Greencore, comments:  “This has been another year of strong performance for Greencore, and these results should be seen as a clear indication that our strategy of focusing on the UK and US Convenience Foods markets is continuing to work well. In the UK, we have delivered substantial like-for-like growth against the backdrop of a challenging retail market and an uncertain economic environment, and in the US we now have a business that is primed to deliver sustainable, profitable growth.”

“Given the underlying commercial momentum across the group, our strong market positions, the transformational acquisition of Peacock Foods in the US that we have announced,” he says, “and our recent new business wins, we are confident about Greencore’s future prospects.”

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