Greencore numbers boosted by improving UK market

International convenience food group Greencore reported a 7.2 per cent rise in revenues this morning, with sales rising to £320.5 million (€387.3mn), on the back of improving economic conditions in the UK. On a like for like basis, excluding the desserts activity which Greencore sold to Müller Dairy UK Group in January 2013 and in constant currency, revenue growth was 9.0 per cent.

Despite a “challenging”overall grocery retail environment, Greencore said that the small store format “continues to exhibit strong growth aiding our food to go activity”.

In the 13 weeks to December 27th, 2013, revenue growth in the group’s convenience food division stood at 6.9 per cent, or on a like for like basis, excluding the Muller business, revenues grew by 9.1 per cent.

Ingredients and property, which now represents less than 5 per cent of group activity, recorded revenue of £14.9 mn, up by 13.7 per cent on the previous year, and 8.5 per cent higher on a constant currency basis.

In the UK, like for like revenue was 7.2 per cent higher than in the prior year, while in the US, constant currency revenue was 26.2 per cent higher than the prior, year reflecting the commencement of its supply agreement with Starbucks.

With respect to full year 2014, the group said that it remains “well positioned as a focused and disciplined convenience foods business” in its chosen markets of the UK and US, noting that economic conditions in the UK are steadily improving.

“Greencore has had a good start to the year and we remain confident in our ability to deliver financial performance for the year in line with market expectations”.

Looking to full year 2015, the group said that it expects to develop a pipeline of future growth opportunities, and that its expectations for input cost inflation remain unchanged at around 3 per cent, with pressure in proteins and dairy.

Goodbody Stockbrokers is now forecasting sales growth of 3 per cent for 2014, and has retained its EPS forecast of 15p, “though the risk is to the upside”. It has re-rated the stock from “buy” to “hold”.