Greencore lifts full-year profit outlook after strong Q2

(Sharecast News) - Irish convenience food manufacturer Greencore lifted its full-year profit outlook on Tuesday as it hailed a strong second quarter. The company, which makes sandwiches for supermarkets, among other things, said strong revenue and volume momentum continued into the second quarter, supported by continued growth with customers and new business won during FY24.

Profit conversion during the quarter was ahead of management's expectations "and underpinned by on-going operational and commercial excellence initiatives and a continued focus on cost control", it said.

As a result, it now expects FY25 adjusted operating profit to be between £112m and £115m, ahead of current market expectations.

Greencore is due to publish results for the half year on 27 May.

Last week, it was reported that Greencore had lifted its takeover bid for rival Bakkavor Group.

According to Bloomberg, which cited unnamed sources, Bakkavor was considering the enhanced proposal.

Two takeover bids from Greencore were rejected by Bakkavor last month, with the latest cash-and-stock offer valued at 189p a share valuing the target at £1.14bn.

At 0950 BST, the shares were up 4.6% at 177p.

Russ Mould, investment director at AJ Bell, said: "Sandwich maker Greencore is on a roll. Its bread and butter of supplying convenience foods is going exceedingly well and profit is now set to beat previous expectations. Investors feasted on the good news, breathing life back into Greencore's shares after a recent pullback.

"The end of the pandemic was the big turning point for Greencore. The more workers have been called back to the office, the bigger the demand for food on the go and Greencore has stepped up to the challenge. The return of the office commute has also eaten into people's spare time and driven extra demand for ready meals, which is another part of Greencore's output.

"Chief executive Dalton Philips has certainly repaired his reputation with the success he's had at Greencore. Previously ousted from Morrisons for presiding over poor performance, he's regained his mojo at Greencore and taken the business to new levels."