Greencore’s half year results impress City

20-May-2014 - Last updated on 21-May-2014 at 10:50 GMT

Greencore boss Patrick Coveney said the firm was 'well-positioned for further growth'

Convenience food manufacturer Greencore’s latest financial results have impressed the City – with group revenue climbing by 8.2% to reach £619.8M – as the firm announced the disposal of its foodservice desserts business.

Damian McNeela, analyst with Panmure Gordon, said: “Greencore has delivered a pleasing set of interim results with adjusted earnings per share rising by 18.6% to 7p, ahead of expectations.”

Group operating profit rose by 14% to £37.2M, while convenience foods like-for-like revenue growth was 9.6% for the 26 weeks to March 28.

‘Outperformed the UK market’

“Greencore’s shares have risen by 11% year-to-date and have outperformed the UK market by about 10%,” said McNeela. The firm had benefited from the combination of revenue growth and improving US margins and further good growth across in its UK business.

Meanwhile, the firm’s sale of its foodservice cakes business, Ministry of Cake, for up to £11M should further improve Greencore’s margin structure, he added.

Alongside its results the firm announced a £30M multi-year investment programme at its Northampton sandwich factory, after the award of new business in the chilled sandwich category.

McNeela judged the firm well-placed to deliver strong growth. “Given the growth prospects and strong cash generation we believe the current valuation remains attractive.”

Profit before tax growth

Panmure Gordon predicted growth of 15.2% in adjusted profit before tax growth to reach £68.6M. Over the next three years, the analyst forecast earnings per share growth of 16%.

Panmure Gordon repeated its ‘buy’ advice on Greencore’s stock.

Patrick Coveney, ceo, said: “The business delivered a strong first-half performance, driving 18.6% earnings per share growth. Our strategy of focusing on the food-to-go market is working well in both the UK and the US.

“Over the past six months we have stepped up our strategic investments in Minneapolis, Jacksonville, Rhode Island and Northampton to support confirmed new business with several large customers. These investments, as well as the strong trading momentum that we are seeing across our Group, have left us well positioned for further growth in the months and years ahead.”

Meanwhile, Alan Williams, Greencore's chief financial officer, told FoodManufacture.co.uk that the £30M investment at the Northamption site will create 'hundreds of jobs'.

Greencore results – at a glance