Dublin’s global sandwich powerhouse, Greencore is on course to reward its shareholders with returns projected at £50 million (€58.5 million) over the next year through dividends and share buybacks, following a sevenfold surge in operating profit during the six-month term ending in March.
The sandwich giant, which has a listing on the London Stock Exchange, boasts a significant American investor base, making up three quarters of its total investors.
The results for the first half of the year leading up to March 29th, 2024, revealed a 6.4% slump in revenue to £866.1 million, which came about partly due to a reduction in business in September, accounting for a 4.6% drop. The revenue dip was also linked to Greencore’s 2023 strategic move to dissociate from a range of low profit contracts along with the €9.8 million sell-off of Trilby Trading, its edible oils venture. Notwithstanding this, the same period reported a like-for-like sales growth of 4.1%.
An impressive 602.8% upswing in operating profit was observed, amounting to £25.3 million, in contrast to the same period from the preceding year. Meanwhile, adjusted operating profit soared 139.8% to hit £28.3 million. This boost in adjusted operating profit was largely attributed to an increase in gross profit, buoyed by the execution of commercial and operational strategies, as per Greencore.
An adjusted profit before tax figure of £16.9 million was reported, a notable increase from the £3.4 million reported the previous year.
Inflation of primary cost elements, barring labour costs, eased within the group, with the bulk of the incurred costs being offset or trimmed down, thanks to various mechanisms such as passing on cost increases and implementing cost reductions.
Greencore unveiled plans for an additional shareholder pay out to the tune of £50 million over the coming year, initially through a share buyback scheme worth up to £30 million. Provided business stays on track, the company plans to announce a dividend for the year ending in September.
Basic earnings per share rose to 2.5 pence, from a reported loss of 0.9 pence in the previous year. Adjusted earnings before interest, taxes, depreciation, and amortisation grew by £16 million to total £55.9 million.
During the festive season, comparable volumes saw an increment of 10% from the previous year in various categories such as sandwiches, soup, sauce, grocery items, and quiche. The group supplied 15.2 million festive season sandwiches to their customers.
The Food to Go categories, which comprises sandwiches, salads, sushi, and chilled snacks, yielded a revenue of £578.9 million, making up about 67% of the total reported revenue. These categories, however, experienced a dip in revenue by £1.5 million due to balanced factors such as comparable volume increase, inflation recovery, and the impact of pricing decisions; but more significantly, by the company’s strategic move to dispense with a number of low margin contracts. The period saw a yearly comparable revenue growth rate of 4.6%.
The company noted a decrease in its net debt of £24.9 million, settling it at £243.9 million. Ending the year, the net debt excluding lease liabilities was £198 million, a decrease of £21.4 million, a result of heightened profitability and cutting down on capital expenditure.
Greencore’s CEO, Dalton Philips, expressed that the company showed “excellent progress” towards its strategic objectives in the first half. He stated that amid tough consumer spending environment, they continued to surpass the market. Philips cheered the company’s growing financial performance, emphasising their dedication to boosting profitability and returns.
Working alongside their primary retail customers, they are innovating new products and services which is propelling the growth of their Food to Go segment, even beyond the market. Philips confirmed their exit from low margin businesses and their ongoing efforts to elevate the return profile of every portfolio component.
Philips indicated that the company has numerous prospects for further augmenting profitability. He stated that they have already initiated investment in their IT architecture, intending to establish a strong foundation for growth and to facilitate additional efficiency across the group.
Even with this new investment and while their seasonally stronger second half is yet to commence, Philips anticipates an adjusted operating profit within a spectrum of £86-88 million for the full year, exceeding current market expectation.