UK convenience food manufacturer Greencore Group plc has released its trading update for the 13 weeks ended Friday 29th December 2023.
The Group reported a “strong” financial and operational performance in Q1 FY24, which Greencore said was “underpinned by outstanding customer service levels (99.2%) and improved profit conversion year-on-year (YoY).”
In Q1 FY24, Greencore said its revenue had decreased by 4.7% to £441.3 million, but after adjusting for the disposal of Trilby Trading Limited in Ireland it said revenue was “broadly flat” YoY. On a like-for-like (LFL) basis, revenue increased 5.8% YoY.
The update said that total manufactured volumes for the quarter had declined 4.8%, which the Group attributed to “the proactive decision to exit a number of contracts” that were delivering “sub-optimal returns” in FY23. Manufactured volumes were 0.5% higher LFL and for the four weeks to 24th December 2023, LFL volumes were 5.6% higher YoY – this was higher than the overall market performance of 1.8%.
Reported revenue in food-to-go categories increased 0.9% to £293.7 million, a 5.8% increase LFL. Total food-to-go manufactured volumes, including exited contracts, declined 2.9%, while ‘sandwich’ category volumes increased 3% on a LFL basis.
According to Greencore, its revenue in other convenience categories was £147.6 million, a 14.2% decrease YoY. It said that on a pro forma basis this represented a 3% decrease, reflecting the disposal of Trilby Trading Limited. On a LFL basis this represented a 5.9% increase, which was driven by ongoing inflation recovery initiatives. Including exited contracts, this declined 7.3%.
Outlook for FY2024
The Group said inflationary pressures on raw materials and energy were “easing”, providing a “more stable” cost outlook in FY24 compared to the prior year. It added that wage inflation would persist due to National Living Wage increases, which it would “continue to manage through ongoing recovery and mitigating actions”.
Dalton Philips, chief executive officer of Greencore, said: “I am extremely encouraged by the strong start to the year for our business. Our manufactured like-for-like volume growth of 0.5% in the quarter continued to outperform the market in the key categories in which we operate.
“This performance has once again been supported by our outstanding operational service levels to ensure availability of products to our customers. Our focus as a team is to provide fresh and healthy foods to our customers and consumers each and every day.”
Philips continued: “Our progress as a business has been delivered through continued effective operational and commercial initiatives, as detailed in November, this has supported improved profit conversion and a strong profit outturn in the quarter. We are committed to continuing to drive profitability through commercial discipline and are investing in several initiatives to develop a robust platform for future growth.
“While we remain mindful of the seasonally important second half of the year, we are confident that the Group will deliver a full year outturn in line with current market expectations.”
Greencore said that it will report its FY24 interim results for the half year ending 29th March 2024 on 21st May 2024.
