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(Sharecast News) - Greencore Group's share price surged on Tuesday morning after the convenience food manufacturer reported a huge jump in first-half profits and launched a share buyback programme as it guided to full-year earnings ahead of market forecasts.
The company said reported a 140% year-on-year increase in adjusted operating profit in the six months to 29 March to £28.3m, helped by a 200 basis-point improvement in the adjusted operating margin to 3.3%.
The result was a pre-tax profit of £14.7m, compared with a loss of £6.2m the year before.
Revenues were down 6.4% at £866.1m after Greencore exited a number of low-margin contracts last year, as well as the sale of the Trilby Trading business last September which had a 4.6% negative impact on the top line. However, sales were up 4.1% on a like-for-like basis, helped by volume growth ahead of the wider market.
Greencore announced it is expecting to return £50m to shareholders over the next 12 months, £30m of which would be via a share repurchase programme. "If the business continues to trade as expected the board intends to declare a dividend for the year to September 2024," the company said.
Looking ahead, the board is guiding to an adjusted operating profit for the full year of £86-88m, compared with company-compiled consensus of £82.9m.
"Greencore delivered excellent progress against its strategic priorities in the first half and continued to outperform the market in a difficult consumer spending environment," said chief executive Dalton Philips.
"We are working with our major retail customers to develop new products and new offerings which are driving the growth of our Food to Go segment ahead of the market. We have exited low margin business and are undertaking a range of actions to increase the returns profile of each element of the portfolio."
The stock was up 15.4% at 160.8p by 1039 BST, rising to levels not seen since May 2021.
