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Greencore First-Half Results – What The Analysts Said

By Steve Wynne-Jones
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Greencore First-Half Results – What The Analysts Said

Greencore has reported a 19.0% decline in group revenue in the first half of its financial year, as the business continues to be impacted by COVID-19 restrictions, however it is optimistic about returning to growth this year.

"Our focus now is on rebuilding revenue, profitability and cash flow momentum as the UK economy reopens," commented Patrick Coveney, Greencore chief executive.

Here's how leading industry analysts viewed its performance.

Darren Shirley, Shore Capital

"Greencore has been through the mill since the pandemic commenced and management deserves considerable credit for navigating this time, very difficult decisions have had to be taken. Whilst so, it has never bet the business and always sought to protect and further nurture the strong market positions that it has won in UK food-to-go and other convenience through the years.

"With the worst of pandemic influenced market conditions hopefully coming to an end, we reiterate our belief that Greencore is well placed to deliver sustained medium-term growth with its core retail customer base; the firm should also benefit from reduced capacity and so market share gains. Greencore is also clearly demonstrating is ability to generate new business wins, not just from customers exposed to the collapse of Adelie but also with existing customers across its product categories. Furthermore, it is doing so in evermore sustainable ways.


"Greencore is well invested, with a robust financial constitution and operating in still high attractive categories, where the barriers to entry are high, that are highly relevant to its retail customers (high margins). Hence, like management, we also look to the future with greater confidence, and welcome the return of both guidance and our financial forecasts."

Roland French, Davy

"Greencore’s interim results reflect a period inhibited by mobility restrictions, with like-for-like revenues in the key Food-to-Go (FtG) category down 26% (Q1 -22%, Q2 -30%). The unwind of restrictions since April has catalysed a strong rebound into the store perimeter, with FtG revenues down 11% versus pre-COVID levels.

"We anticipate a lag in operating margin as revenues rebuild and thus will hold our FY 2021 and FY 2022 adjusted operating profit forecasts (£38m and £75m respectively) while nudging up revenues to account for recent contract wins."

CFI Research Team, Cantor Fitzgerald

"Greencore this morning issued weak H121 results (year-end September), reporting an adjusted loss per share of 1.4p (EPS of 5.8p in H120) from adjusted operating profit of £0.2m (£38.3m in H120) and a 19% decline in revenue to £577.1m (£588m forecast; £712.7m in H120). On balance sheet strength, net debt was £332.1m at period end with cash and undrawn committed debt facilities of £302.0m. The H121 Net Debt: EBITDA covenant was waived as it was 12.5x at the end of the period.


"Greencore is guiding FY21 adjusted operating profit above FY20, which was £32.5m. Coming into the numbers and in anticipation of a return to more normal business conditions as economies come out of lockdown, the market was looking for Greencore to grow earnings by 52% to 4.4c from operating profit of £45.8m and revenue of £1.30bn, benefitting from considerable operating leverage and reduced COVID-19 related costs. From the current update market expectations may be lowered in the coming days."

Seaspray Financial

"Greencore Group plc has reported its earnings results for the six-month period up to March 26th, during which time it saw a 19% fall in group revenue due to a cutback in consumer mobility as a direct result of COVID restrictions. The company saw its revenue drop from £712.7 billon one year ago, to £577.1 million, while group operating profits plunged 89% from £35.6 million to £3.9 million. Adjusted losses before tax came in at £7.9 million compared to a profit of £3.1 million one year prior. In addition, the group stated that it had a robust liquidity position with cash and undrawn debt facilities of £302 million at the end of March.

"The shares are a significant 13% lower to £1.468 this morning after this latest release from Greencore, however still 26% higher YTD as the stock traded up from a low January base of just £1.092. Greencore had a forward-looking P/E of 33x at last night's close. The firm re-introduced guidance today, now forecasting its current fiscal year 2021 adjusted operating profit to come in ahead of the £32.5 million attained the year prior."

© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more Private Label news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine

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