Convenience food manufacturer Greencore Group Plc has issued its trading update for the 13 weeks ended 27th December 2024.
During Q1 FY25, the Group’s reported revenue increased by 7.5% to £474.3 million, driven by an increase in volumes and mix of 4%, as well as the positive impact of inflation recovery and price of 3.5%. On a like-for-like basis, revenue grew at 4.9%.
Total volumes for the quarter increased 2.6% due to underlying volume growth, supplemented by new business won during FY24, compared to an overall market performance of 0.5%. Greencore said this was delivered despite its customers remaining under “significant cost pressure” from Government driven policy changes and a changing competitive landscape.
During Q1 FY25 the manufacturer also reported that revenue in its food to go categories increased by 7.2% to £314.7 million, which was driven by an increase in volumes and mix (including the impact of net new business wins) totalling 2.8%, and the impact of inflation recovery and price totalled 4.4%.
Overall sandwich volumes increased 2.5% year on year, versus a market performance of 2.4%. Greencore reported that sushi continued to show “positive momentum” with volume growth of 15.3% year on year, driven by the launch of a new range with one of its customers.
Reported revenue in other convenience categories was £159.6 million, an 8.1% increase year-on-year, which was driven by an increase in volumes and mix (including the benefit of net new business wins) totalling 6.4%, and the impact of inflation recovery and price, totalling 1.7%. Overall chilled ready meals volumes increased 23.5% year on year, driven by the onboarding of a significant new chilled ready meals contract.
Profit conversion in the quarter continued to be strong and was in line with Greencore’s expectations, supported by the Group’s effective operational and commercial initiatives.
Outlook
Greencore said it continued to face an “unprecedented labour cost challenge” from the National Living Wage and National Insurance increases set out in the UK Budget, and it is committed to offsetting this in full in the following ways; manufacturing automation, operational excellence, labour planning and technology investment, alongside its usual inflation recovery measures.
The nature of its is labour- intensive, and the Group has been working to offset this cost. Greencore said that given the scale of the challenge, it was also engaging in constructive dialogue with its customers to help mitigate these costs.
Following a “positive start” to the year, the Group expects to deliver a FY25 full year performance in line with current market expectations.
“We have delivered a strong Q1 and are confident that we will deliver a full year performance in line with current market expectations.”
Dalton Philips, chief executive officer at Greencore, commented: “The Group has made a positive start to FY25, and I am encouraged by the platform this provides us for the rest of the financial year. Our volume growth of 2.6% in the quarter again outperforms the market and is driven by both underlying volume growth and winning new business. This reflects a combination of the quality of our products, our commitment to innovation and the strength of our relationships with our customers.
“We continue to make progress against each of our strategic objectives and are well positioned to continue this momentum through FY25. We continue to remain focused on making high quality food, enhancing our profitability, and strengthening our position as the UK’s leading convenience foods manufacturer. I would like to thank all our brilliant colleagues for their continued support and commitment which enables us to deliver for our customers, consumers and our shareholders.
“We have delivered a strong Q1 and are confident that we will deliver a full year performance in line with current market expectations. We will share more detail on our medium-term growth strategy at our Capital Markets Event in February.”
