FDBusiness.com

Greencore Group, one of the UK’s leading manufacturers of convenience food, has reported a 1.6% increase in revenue to £712.7 million for the 26 weeks ending 27 March 2020 with pro forma revenue growth of 0.1%. First half adjusted operating profit fell by 14.3% to £38.3 million and adjusted operating margin declined by 100bps to 5.4%.

Although the UK trading environment remained subdued for much of the period, there were some signs of improvement before the UK Government’s escalating measures in March to combat the outbreak of COVID-19. The business was significantly impacted in the second half of March by the effect that these measures had on consumer demand, most particularly in food to go categories.

First half revenue in the Greencore’s food to go categories (comprising sandwiches, salads, sushi and chilled snacking) totalled £455.8 million and accounted for approximately 64% of reported revenue. Reported revenues increased by 1.9% in these categories, driven by the acquisition of Freshtime. Excluding this acquisition, pro forma revenue declined by 2.1%.

Reported revenue growth increased by 1.0% to £256.9 million and pro forma revenue grew by 4.0% in the group’s other convenience categories, which comprise activities in the chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Pudding categories, as well as an Irish ingredients trading businesses.

Patrick Coveney, chief executive of Greencore.

The COVID-19 pandemic has had a dramatic and volatile impact on the shape of UK food consumption and on the first six weeks of Greencore’s second half performance. Weekly demand in the group’s food to go categories declined by up to 70% and is currently less than 60% below prior year levels. However, there has been sustained growth in the group’s other convenience categories. Group revenue is currently approximately 60% of prior year levels on a proforma basis.

In response to these changed levels of consumer demand and in order to maintain efficient production, Greencore has moved rapidly to simplify its product ranges with its customers. Greencore has worked collaboratively with its customers to quickly adapt to the effects of the lockdown while maintaining customer service and working together on ways to maintain the integrity of the supply chain, while planning for activation as social restrictions begin to ease.

The convenience food group has also taken prudent measures to protect profitability and cashflow to ensure maximum flexibility through this uncertain environment.

Patrick Coveney, chief executive of Greencore, comments: “I am hugely proud of the way in which our people have responded to the extraordinary challenges of  COVID-19, and  take this opportunity to publicly thank them for their role in keeping the UK fed over the last two months. We have implemented a broad range of actions to mitigate the impact of COVID-19 on our business and to position us for growth as the pandemic eases. More than ever before, our deep customer relationships, leadership positions in key food categories, well invested network, flexible model, and outstanding people are key strengths that ensure we trade our way resiliently through this uncertain period.”