Greencore sees FY profit in line with market views after 'strong' first half

(Sharecast News) - Food producer Greencore said on Wednesday that full-year profit was set to be in line with market expectations as it hailed a strong first-half performance and said the integration of Bakkavor was progressing well.

In the half year to 27 March, adjusted operating profit rose 62.2% from the same period a year earlier to £73.3m, with reported revenue up 43% to £1.3bn.

The company swung to an operating loss of £13.4m from a group operating profit of £38.1m, however. This was mainly due to the £1.2bn acquisition of rival Bakkavor, with increased exceptional items relating to one-off transaction and integration costs of £60.6m.

Greencore said the market was subdued in the first half as consumer confidence and demand were hit by external factors such as apprehension in the lead-up to and following the Autumn budget, and prolonged inclement weather in the second quarter.

Nevertheless, volume performance was robust, it said, with manufactured volume growth in the legacy Greencore business of 0.3%, outpacing a flat grocery market.

Greencore continued to win new business with customers in salads, sushi, ambient grocery, and desserts and said it will begin to be onboarded into the network throughout the third and fourth quarters.

The company also said that while it continues to perform strongly, it is exploring a sale of its US business.

Greencore expects to deliver full-year adjusted operating profit in line with current market expectations of £232m, or a range of between £227m and £241m.

Chief executive Dalton Philips said: "The integration of Bakkavor is progressing well and to plan - and we are focused on bringing our 4,000-plus product portfolio and enhanced capabilities to our customers. We are firmly on track to deliver our target of annual cost synergies of at least £80m within three years post-acquisition.

"While we continue to monitor macro developments and inflationary impacts from the events in the Middle East, we remain confident in the short-term mitigations we have in place and the outlook for the business."

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