Goodbody comment27 Aug 2019 19:13
Total Produce Greenyard profitability to improve in H1 though read-through limited for Total Produce Greenyard this morning provided a Q1 trading update in which it indicated its expectation for H1 EBITDA (due in November) to be in the range of €43-45m, significantly up from the €23.3m achieved in H118. The improvement is largely driven by the implementation of the Group’s Transformation Plan which focuses on margin, profitable volume and rightsizing the overhead cost base. Overall Q1 sales were down 2.6% with the performance by division: i) Fresh (most comparable to Total Produce) revenues down c.4% due to: a) the termination of certain loss-making volumes; and b) price pressures in categories like grapes, melons and citrus. In addition, the benefit of newly signed partnership volumes has yet to fully flow through; and, ii) Long Fresh sales were up 4.1% with strong growth in Foodservice and industry customer segments. This is a solid update from Greenyard though it remains difficult to get a clear read-through for Total Produce given the company-specific nature of some of the issues facing Greenyard.
Total Produce will report H1 results on Thursday for which we forecast c.2.5% decline in Total Produce EBITA on a standalone basis (e.g. ex Dole) which reflects a tough prior year comparative (+c.7% in H118) and some of the competitive pricing dynamics Greenyard outlined in its statement. Foe Dole, we anticipate the business to report a solid recovery in EBITDA following the industry-wide challenges faced in FY18. Overall, we expect the Group to reiterate its FY19 guidance of mid-to-high single digit EPS growth
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