Greencore chief executive Dalton Philips aims to return the convenience foods group to the acquisitions trail for the first time since before the Covid pandemic, saying he “would love” in time to buy something that would see the former Irish Sugar Company manufacturing in Ireland again.
The Dublin-headquartered maker of sandwiches and ready meals for stores from Aldi to Marks & Spencer has 16 manufacturing sites across the UK. It closed its last Irish sugar factory, in Mallow, Co Cork, in 2006.
It sold its remaining Irish trading company, a vegetable oil importer and distributor, Trilby, last year and disposed an animal feed business in 2020.
Mr Philips, who joined Greencore two years ago as it was grappling with the effects of the pandemic and inflation, has established a small team to look at potential deals in the coming years. The group is open to purchase in three areas, chief financial officer Catherine Gubbins told The Irish Times, after Greencore reported strong results on Tuesday for the year to September. These include food categories “adjacent” to its current offering, which spans sushi to ready-made Italian meals; a new convenience food area; or a new geography.
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Mr Philips signalled an interest on the same call in potentially doing a deal in Ireland in time. “Many Irish customers are eating our products. But it would be terrific to manufacture on the island of Ireland, if the right category was there,” he said.
Greencore executives are ruling out a return to the US, a market it exited in 2018 after a difficult decade trying to build up a presence.
The group reported results for its last financial year that came in advance of forecast, even after Greencore raised its projections three times over the course of 2024. Adjusted operating jumped 27.7 per cent to £97.5 million (€117 million). It had said in early October that it would come in between £95 million and £97 million.
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It also said it sees adjusted operating profit in the current year coming in at the “top half of the of the range of current market expectations”. That points to a figure between £102.5 million (€123.6m) and €107 million and may see Greencore hitting its pre-Covid profit level – of £105 million – a year earlier than planned.
“Greencore is continuing to deliver, both operationally in terms of efficiencies and profit progression, but also in terms of expectations management, where ‘beat and raise’ has become the new normal,” said Andrew Wade, an analyst with US investment bank Jefferies.
Shares in the group were up 11.5 per cent in London in midday trading.
“The group delivered excellent progress against its key financial metrics and strategic priorities in financial year 2024, underpinned by close customer engagement in a period that continued to be defined by cost inflation and muted consumer confidence,” said Mr Philips.
“Over the last 12 months, we have remained focused on making high quality food, rebuilding our profitability and positioning Greencore to be known as the UK’s leading convenience foods manufacturer. We continue to make progress against each of our strategic objectives and are well positioned to continue this momentum in financial year 2025 and over the longer term.”
Shares in Greencore have soared more than 130 per cent so far in 2024 as it continues to recover from a series of hits over the past 4½ years, including the Covid-19 pandemic, supply-chain and labour issues, and inflation.
Revenues fell by 5.6 per cent to £1.81 billionlast year, driven by the sale of Trilby and the decision to exit a number of low-profit contracts.
Like-for-like sales rose by 3.4 per cent, also helped as it continued to recover its own rising costs. Pretax profit jumped 36.1 per cent to £61.5 million. Net debt declined to £148.1 million, slightly below its earnings before interest, tax, depreciation and amortisation (Ebitda) for the year, from £145 million.
Following the commitment to return £50 million to shareholders in May, the group distributed £40 million to shareholders via share buy-backs in the financial to September. It announced an additional £10 million buyback programme on Tuesday and confirmed that it was reintroducing a final dividend, of two pence per share.
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