Greencore FY profits rise, launches £15m share buyback

(Sharecast News) - Food manufacturer Greencore said on Tuesday that it had seen "strong growth" in food-to-go and other convenience categories in the 53 weeks ended 30 September, driving both revenue and profits higher. Greencore said group revenues had grown 31.3% year-on-year to £1.7bn, and were also up 20.3% above 2019's pre-Covid performance, while adjusted operating profits almost doubled from £39.2m to £72.2m and operating margins expanded from 2.9% to 4.2%

Group return on invested capital increased to 8.4% from 4.5% at the end of the 2021 trading year due to the increase in operating profits, while adjusted earnings per share rose from 3.7p to 9.2p.

Net debt dipped from £183.1m to £180.0m and Greencore said it had a "robust balance sheet" with "substantial liquidity headroom" and was making "continued progress on deleveraging".

The London-listed firm said its revenue performance in the early weeks of the 2023 trading year had "broadly held" up. However, the group also noted "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," said Greencore.

"We expect that FY23 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."

Greencore also announced its intention to commence a share buyback programme during the course of 2022, with the firm following up its recent £10.0m buyback programme with another aimed at repurchasing an aggregate consideration of up to £15.0m.

As of 0945 GMT, Greencore shares were down 2.58% at 69.36p.

Reporting by Iain Gilbert at Sharecast.com