Greencore Group PLC (LSE:GNC), the convenience foods maker, has raised its profit guidance as the “food to go” sector picks up.
The group said it saw strong revenue momentum in the 13 weeks to 25 June.
The period, the third quarter of the group’s financial year, saw pro forma revenue up 53.1% year-on-year but down 2.8% on the same period of 2019 (i.e. pre-pandemic); however, the group noted that in June, pro forma revenue was 1% higher than in June 2019.
Pro forma revenue growth in the food to go categories was 91.1% above the prior year levels and 9.3% below the equivalent pre-COVID levels in the third quarter of fiscal 2019.
Revenue momentum has remained encouraging in the first three trading weeks of July, Greencore said.
The group now expects to generate an adjusted operating profit of between £36mln and £40mln in the current financial year, up from the previous guidance of a figure that would exceed fiscal 2020’s £32.5mln.
Net debt (excluding lease liabilities) at the end of fiscal 2021 is anticipated to be below £240mln with the net debt:EBITDA (underlying earnings) comfortably below 3.0.
"We are encouraged by the improvement in revenue, profitability and cash flow momentum in Q3 and the early weeks of Q4. Against the backdrop of the UK economy reopening fully, we are rebuilding our economic model effectively and sustainably with all stakeholders, supported by our long-standing customer relationships and further enhanced by the new business wins we have secured this year,2 said Patrick Coveney, the chief executive officer of Greencore.
“The performance is underpinned in particular by the energy and dedication of our people. We are also delighted to have made progress in creating a fully recyclable sandwich skillet, a key commitment of our sustainability strategy. We have a strong position in the dynamic UK convenience food market and are confident about our medium-term prospects,” he added.
On the subject of skillets – the usually non-recyclable tray used in packaged sandwiches and sushi et al – the group said it would soon commence 'test and learn' trials of an all fibre plastic-free recyclable sandwich skillet in Sainsbury and Co-Op stores across the UK.
The packaging, developed in conjunction with ProAmpac, is believed to be the first of its type in the world. It will have a plastic-free window and be made entirely from paper-based material. Due to the level of moisture resistance the skillet provides, sandwiches packaged in the new skillet will have the same shelf life as if they were packaged in a traditional skillet, Greencore claimed.
Andy Wright, the head of sustainability at Greencore, said developing a fully recyclable sandwich skillet is “one of the key ways we can reduce waste and help our customers do their bit to protect the environment”.
Shares in Greencore were up 4.2% at 134.3p.