Greencore revenues rise but UK rail strikes and extra bank holiday hit volumes

Dublin-headquartered food group Greencore said revenue grew in the fourth quarter of the year, but the growth rate in some sectors moderated and the company said it remained watchful on the potential impact of inflation.

In a trading update in advance of its full-year results, due to be published at the end of November, the company said revenue for the year ended September 30th was £1.7 billion (€1.9 billion), up from £1.3 billion a year earlier.

The group predicted adjusted operating profit would be at the lower end of the £72 million to £77 million range given in at the end of July, due to the impact of rail strikes and the additional September bank holiday on volumes.

Revenue grew 25 per cent in the fourth quarter of the year, driven by a combination of increased volumes, an increase in underlying pricing, new business in ready meals, and increased revenue in the group’s Irish ingredients trading business.

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The revenue growth in the food-to-go category fell compared to the third quarter of the year, rising 23 per cent. That was due to a stronger comparative period, the volume impact of rail strikes and the unexpected bank holiday for Queen Elizabeth’s funeral, and the full-year effect of new business wins in the fourth quarter of 2021.

For the full year, volume growth continued, and group revenue rose 29 per cent year on year. The food-to-go categories rose 35 per cent as volume grew, new business impacted the bottom line, and inflation recovery was factored in.

Greencore reduced its net debt marginally year on year to £180 million through tight cost management, and delivered a £10 million share buyback programme as part of a £50 million return to shareholders planned over two years.

Looking ahead, the company said it would closely monitor the impact of the UK macroeconomic environment on consumer sentiment and demand. “We don’t currently see an impact as consumer demand has held up well. However, we remain watchful and cautious about the potential impact of cost-of-living factors through the year ahead,” Greencore said in a statement.

“We remain focused on the recovery of inflation through all mechanisms available and are working with our customers and supply partners to mitigate the ongoing impact of the persistently high inflation across the industry on consumer prices. We have substantially recovered the inflation that we have experienced over the last 12 months, and we are making decisions whether to bid for or renew contracts based on their economics, including the ability to recover inflation.”