21st May 2024 11:04
(Alliance News) - Greencore Group PLC on Tuesday outlined the tantalising prospect of a return to the dividend list, as its post-Covid recovery gathers pace.
The Dublin-based producer of convenience foods said in the first half ended March 29, it swung to a pretax profit of GBP14.7 million, from a pretax loss of GBP6.2 million the year prior.
Revenue fell 6.4% to GBP866.1 million from GBP925.8 million. The revenue decline reflects its decision to leave a "number of low margin contracts".
Helping its bottom line, cost of sales fell 12% to GBP585.0 million. It reported GBP1.5 million worth of net exceptional costs, down from GBP6.4 million. Exceptional costs this time around included GBP1.5 million worth of transformation costs. Costs in the prior year included GBP7.7 million worth of reorganisation costs.
The company currently expects a full year adjusted operating profit in the range of GBP86 million to GBP88 million, up from GBP76.3 million last year. Its guidance is ahead of "current market expectations".
Chief Executive Officer Dalton Phillips said: "We are working with our major retail customers to develop new products and new offerings which are driving the growth of our Food to Go segment ahead of the market. We have exited low margin business and are undertaking a range of actions to increase the returns profile of each element of the portfolio."
If trading continues as expected, Greencore said it will pay a dividend for the first time since financial 2019.
The company also announced a GBP30 million share buyback.
AJ Bell analyst Russ Mould commented: "The pandemic was catastrophic for companies who relied on large numbers of office workers to buy their products. As one of the country’s biggest sandwich makers, Greencore saw demand shrivel up and its business knocked sideways. Since then, it’s been on a mission to get things in order.
"Fortunately, Greencore has been able to accelerate its recovery plan as life returns to normal. Its core bread and butter has benefited from more people returning to the office as well as major retailers eager to invest in product innovation as they compete for the lunchtime crowd."
Greencore shares jumped 17% to 163.40 pence each in London on Tuesday morning.
By Eric Cunha, Alliance News news editor
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