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Greencore announce £50m share buyback as earnings and revenue recover

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Convenience food maker Greencore will return up to £50m to shareholders over the next two years thanks to an increase in half-year sales and profit.

The results come as the group enters its peak trading season in what it says is a “challenging environment” due to runaway inflation.

Group sales increased 33.6 percent and profit increased 84.6 percent in the six months ended March compared to the same period last year, Greencore said today.

It said it had recouped “significant input costs and other inflation” incurred since Russia’s February 24 invasion of Ukraine began “essentially through explicit price recovery mechanisms, constructive dialogue with customers and operational efficiencies.”

“The group is fully committed to addressing the additional inflationary challenges that have materialized since March 2022 and is making good progress in this regard,” reads an interim report.

It expects full-year results to come in line with market expectations, although “the inflationary environment remains volatile.”

Market expectations imply operating profit of around £60m, according to Goodbody stockbrokers, which is in line with pre-Covid levels.

Greencore, which is headquartered in Santry, supplies a range of chilled, frozen and ambient food to major UK food retailers and has 16 manufacturing and distribution sites in the UK.

Revenue was £770.8m (€905m) over the period, up from £577.1m in 2021, thanks to strong growth in take-away and convenience food.

Pro forma revenue in Greencore’s food-to-go categories rose 48 percent year-on-year and is now about 8 percent above pre-Covid levels.

Adjusted operating profit reached £17.2m (€20.1m), up from £0.2m in the six months to March 2021.

Adjusted operating margin increased to 2.2 percent from zero in 2021.

Adjusted earnings before interest, tax, depreciation and amortization came in at £43.8m, up 65.3 per cent from 2021, with adjusted earnings per share of 1.8p compared to a loss of 1.4p in 2021.

Net debt was £219.3 million as of March 25.

Greencore said it would return the £50m to shareholders in the form of a share buyback.

The group continued to add new stores in the six months to March, with revenue from the new sales accounting for just over a third of Greencore’s pro forma revenue growth over the period.

A previously announced £30m investment to support the new business is expected to be completed in the fourth quarter of this year.

“Despite the challenging operating environment, it is encouraging to see the strength of the revenue momentum,” Goodbody food and beverage analysts Jason Molins and Patrick Higgins said in a statement.

“Furthermore, the group has offered consolation regarding its ability to offset cost inflation through a combination of price recovery and efficiency gains.”

Earlier this month, Greencore announced that DAA boss Dalton Philips will take over as chief executive officer and executive director from Patrick Coveney, effective September.

https://www.independent.ie/business/irish/greencore-announces-50m-share-buyback-as-profits-and-revenues-recover-41682134.html Greencore announce £50m share buyback as earnings and revenue recover

Fry Electronics Team

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