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Fresh Produce

Total Produce Sees Revenue Up 2% In First Half, Despite COVID-19 Challenges

Fresh produce firm Total Produce said that demand from retail and wholesale 'remained strong' in the first half of its financial year, offsetting reduced demand from the foodservice sector.

Commenting on its performance, Roland French, analyst with Davy Stockbrokers, said that the group's performance "highlights the critical importance of the produce category to consumers and the relevancy of its operating model to B2B partners".

Sales Performance

The group posted a total revenue increase of 2.0% in the half-year period, to €3.11 billion, with adjusted EBITDA up 0.9% to €118.2 million.

Adjusted EBITA was down 1.5% however, with adjusted fully diluted EPS down 3.6% to 9.45 cent.

"We are pleased with the very strong performance in the first half of 2020 against the backdrop of the COVID-19 pandemic, which has posed unprecedented challenges to the global economy," commented Total Produce chairman Carl McCann.

"The health and wellbeing of our people is our number one priority while at the same time recognising our role in supplying vital foodstuffs, particularly during the pandemic. We are very proud of the efforts of all our people. Their dedication, commitment and hard work ensured the group’s supply chains and operations continue to function and remain open across all our key markets."

Financial Position

In a statement, Total Produce said that it is in a 'strong financial position' with net debt of €218.8 million, down from €294.3 million as of June 2019.

Looking ahead to the remainder of the year, Total Produce said that it expects revenue and adjusted EBITDA to be 'slightly ahead' of that of 2019, with adjusted EPS slightly behind due to the 'prevailing uncertainties' of COVID-19.

It said that it plans to pay a 2020 interim dividend of 0.9129, unchanged compared to the prior year.

"The Group remains in a very strong financial position and continues to actively pursue the growth and expansion of the business," McCann added.

Analyst Viewpoint

Commenting on the first half, Davy's French said, "Against an acutely challenging backdrop (and historical 20-25% exposure to the food service channel), flat like-for-like (LFL) sales through the first half is a stand-out performance. With a robust profit performance and more constructive outlook, we will nudge up our EPS by 2-3% (which captures an FX headwind).

"Trading on 8.1x FY 2020 EPS, there is a material dislocation between the equity and fundamentals and we reiterate our ‘Outperform’ rating."

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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