Full-year revenues to fall by 14% at Greencore

Dublin-headquartered convenience food group Greencore said on Monday that it expects full-year revenues to fall by 14 per cent, as it pointed to an ongoing improvement in demand for its products.

In a trading update for the fourth quarter and the full year ended September 25th, the sandwich maker said it anticipates revenues for the full year of about £1.3 billion (€1.4 billion), down by 14 per cent on the prior year.

While revenues fell by 36 per cent in the third quarter, it improved in the fourth, declining by 19 per cent amid recovering demand, chief executive Patrick Coveney said.

“Our agile business model, the depth of our customer relationships and the strength of our product range has enabled us to already capitalise on new business opportunities that will help underpin the build back in group revenue. We are realistic but also confident in our plans for FY21, and remain excited by Greencore’s longer term prospects,” he said.

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Greencore said that while UK consumer sentiment and broader economic activity remain “both fragile and subdued,”, it saw “a progressive uplift” in demand for food-to-go categories through the fourth quarter as the economy slowly reopened, notwithstanding the temporary cessation in production at its Northampton site in August.

This followed an outbreak of Covid-19 in the area and at the site, with about 300 workers testing positive, but production was fully restored by the middle of September.

Greencore said that adjusted earnings will be about £85 million for 2020, after charging in excess of £10 million of non-recurring Covid-19 related operating costs. These costs include front-line employee recognition payments, incremental costs relating to furloughed colleagues, costs incurred to reconfigure production areas and implement measures to ensure safe working and social distancing, and are net of UK Government assistance.

Net debt (excluding lease liabilities) at year end is expected to be £345 million, “reflecting an improvement in underlying cash generation in the final quarter”.

In a note, Goodbody Stockbrokers described the results as a “solid outcome” for the group, given the challenging backdrop.

Greencore is the largest manufacturer of pre-packed sandwiches in the UK and supplies most of the big retail multiples, including Marks & Spencer, Waitrose, Sainsbury's and Tesco. The group said it had a resolute focus on three things: "keeping our people safe, feeding the UK, and protecting our business".