Greencore flags operating profit ahead of expectations

Convenience food producer Greencore Group reported a solid end to the financial year in a trading update on Tuesday, flagging an operating profit figure ahead of expectations.

The firm said its pro-forma revenue was up 4% year-on-year in the fourth quarter, contributing to 13% growth for 2023.

It forecast adjusted operating profit to surpass current market expectations, estimating it to be near £74m to £76m.

In terms of financial health, the company managed to reduce its net debt, excluding lease liabilities, to £155m at the year's end from 2022’s £180m.

That was achieved while accommodating roughly £36m in capital expenditure and proceeding with a further share buyback.

Greencore maintained its net debt-to-EBITDA ratio within the medium-term target range between 1.0x and 1.5x.

The company noted that it had returned £35m to shareholders since the restart of value return initiatives in May.

It said it was committed to extending an additional £15m as part of its commitment to return £50m by May next year through a further share buyback programme.

Greencore also noted the successful completion of the sale of Trilby Trading on 29 September, following approval from relevant authorities and the fulfilment of customary closing conditions.

“The Greencore team has delivered a strong second half performance in what was a difficult seasonal comparative period and against the backdrop of inflation and a challenging consumer environment,” said chief executive officer Dalton Philips.

“We continue to drive operational improvements across the business underpinned by our commitment to quality and customer service.

“While macro-economic uncertainty remains, we are pleased with the expected 2023 outcome and are committed to driving an improved financial performance in the period ahead.”

At 0921 BST, shares in Greencore Group were up 15.56% at 79.45p.

Reporting by Josh White for Sharecast.com.