14th Jan 2005 07:00
Geest PLC14 January 2005 14 January 2005 Geest PLC pre-close update for year ended 1 January 2005 Geest PLC (Geest), the leading fresh prepared foods and produce company, isproviding the following update for the year ended 1 January 2005, prior toentering its close period and ahead of its preliminary results announcement on17 March 2005. Group EBITA for the year will be within the Board's existing range ofexpectations, despite the difficult trading conditions as reflected recently instatements by retailers. Group sales are expected to show like-for-like growthof some 5%. Reported Group sales are likely to show a decline of 2% due to thechange in accounting treatment of most of our produce sales from the mid-year.These are now accounted for on an agency basis, as announced on 14 July 2004. Sales from our UK fresh prepared foods business will have grown by around 4%(like-for-like), although we saw a lower than expected rate of sales growth inthe second half owing to worsening general retail conditions in the Autumn. Our sales of fresh prepared foods in continental Europe are expected to havegrown by around 5%, despite having seen some sales price pressure in all ourmarket sectors. We expect produce sales to have grown by about 12% (on the basis of a consistentaccounting treatment), reflecting growth from the creation of InternationalProduce Limited in July 2004. Trading conditions throughout 2004 were difficult as competition betweenretailers focused on price to an unprecedented level and pressure on suppliers'margins remained intense. Management's response was to secure a number ofefficiency improvements. In 2004, these will have generated savings of at least£22 million, although, as expected, they have been offset by selling pricereductions and input cost inflation. Overall, therefore, we have beensuccessful in our plan to broadly hold margins in our UK fresh prepared foodsbusiness. In addition to these savings, as previously announced, actions havebeen taken to streamline our overhead structure with a managerial job reductionof over 10% going into 2005 (the costs of which have been taken in 2004). In September 2004, we acquired Anglia Crown and are pleased with its performanceto date. This acquisition was one of a number of initiatives to create newrevenue channels for Geest from fresh prepared foods. Geest generated a strong free cash flow, part of which was used to buy back over3% of shares (held in treasury), a process which has been halted during offerdiscussions. As announced on 21 December 2004, Bakkavor, the potential offeror,is currently engaged in due diligence. Looking forward, although we expect high levels of retail price competition tocontinue, there is clear, continuing growth in consumer demand for freshprepared foods. The level of market growth for UK fresh prepared foods remainswell ahead of the food manufacturing sector and is growing currently at around6%. Geest has won new business with existing UK retail customers which willbenefit sales levels through the first half of 2005. These sales will have anestimated annualised value of £30 million. We remain confident of the opportunity for further growth for Geest, supportedby its leading market positions, its new and developing revenue streams, andwell-invested and modern production base. Our efficiency programmes remain ontrack and are planned to generate further improvements in, and beyond, 2005. - ENDS - A conference call for analysts and investors has been scheduled at 09:30 GMTwith Mark Pullen, Group Finance Director, on Friday 14 January. For thosewishing to listen, the telephone conference number is 08451 400 165 (from theUK) and +44 1452 568 061 (from overseas). Please note that the conference callis to discuss the above pre-close update and there will be no further comment onthe current bid discussions, following the statement on 21 December. Enquiries Geest: 01775 761 111 Mark Pullen, Group Finance Director Paula Cooper, Group Communications Manager Financial Dynamics: 020 7831 3113 Tim Spratt and Michelle Morton This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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