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Greencore Group PLC on Tuesday said revenue jumped in the third quarter of financial 2022, and it is on track to deliver strong earnings growth in the full year.
For the 14 weeks to July 1, the convenience food maker's group revenue amounted to £486.2 million, representing a 35% increase year-on-year, and up pro forma by 26%. During the same period in 2019, pro forma revenue was 22% above equivalent pre-COVID levels.
This was driven primarily by a 40% revenue growth in food-to-go categories to £333.4 million, as takeaway demand recovered, augmented by new contract wins and increased pricing. In other convenience food categories, revenue rose 24% year-on-year to £152.9 million.
‘Profit momentum improved in Q3 22 driven by volume growth and better conversion due to enhanced productivity,’ Greencore explained.
It expects to generate an adjusted operating profit of between £72 million and £77 million, which would be nearly doubled from £39.0 million in financial 2021.
Net debt at the end of financial 2022 is expected to be about £200 million, up from £183.1 million a year before.
Executive Chair Gary Kennedy said: ‘I am encouraged by the progress we have made during Q3 against the backdrop of inflationary pressures for the industry. Revenue and profit conversion through the period has been encouraging and we are confident in our ability to continue to manage the various industry challenges and end the year strongly.’
Greencore said it has launched a share buyback programme worth up to £10 million. Back in May, the company said it would recommence a value return of up to £50 million over the next two years.
Its strategic capital investment programme of about £30 million across three existing manufacturing sites is progressing to plan, Greencore said. The first phase of the programme will deliver an annual recurring benefit of about £30 million in financial 2024. ‘The group will invest a total of approximately £24 million during financial 22 and 23, including capital expenditure of approximately £8 million, to unlock these improvements,’ the company added.
Looking ahead, Greencore said inflation trends are expected to continue into financial 2023, but it remains confident to deliver a strong year-on-year improvement in profitability, cash flow and returns for financial 2022.
Shares were down 2.1% at 105.10 pence each on Tuesday morning in London.
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