Greggs plc (LON:GRG) expects to pay a special dividend this summer as it looks to return some of the near-£90mln cash pile it built up over 2018, which was a record year for the high street baker.
FTSE 250-listed Greggs had a cash balance of £88.2mln at the end of December – much higher than the £40mln it wants to have on its books come the end of this year.
READ: Greggs lifts 2019 profit guidance as new vegan sausage roll helps to beef up sales
“We currently expect to be in a position to declare a special dividend at the time of our interim results in July,” Greggs said on Thursday.
The special divi comes on the back of an “exceptional” year for the sausage roll maker, which has managed to brush off the wider high street malaise that has affected many of its retail and restaurant peers.
Record pre-tax profits
As guided for back in January’s bullish update, sales rose 7.2% to £1.03bn (2017: £0.96bn) in the 12 months ended 31 December, with like-for-like sales climbing 2.9% (2017: £3.7%).
Pre-tax profits jumped by 15% to a record £82.6mln (2017: £71.9mln).
Given the best-ever results, Greggs hiked its total dividend for 2018 by 10% to 35.7p (2017: 32.2p)
“2018 was a year that tested the resilience of Greggs' business model and demonstrated the benefits of our strategic investment programme,” said chief executive Roger Whiteside.
“The first half was significantly impacted by extreme weather but once this returned to normal our underlying strengths helped us recover the lost ground and deliver results for the year that exceeded our expectations.”
‘Very strong’ start to 2019
Whiteside added that whilst there are “significant uncertainties” facing most UK companies in the months ahead, Greggs has made a “very strong” start to 2019.
Like-for-likes – a key metric for retailers which strips out the impact of store openings and closures – soared almost 10% in the seven weeks ended 16 February.
The “exceptional sales performance” has been helped by the publicity surrounding the recent launch of its vegan sausage roll, which went viral and even made an appearance on national daytime TV.
At the time, analysts praised Greggs’ PR team for showing itself to be “extremely smart and nimble”.