Greencore revenues struggle in challenging quarter for groceries

Greencore revenues struggle in challenging quarter for groceries

Convenience foods manufacturer Greencore Group plc (LON: GNC) has seen its reported revenues decline during the third quarter of its financial year and the year-to-date, following what the company described as a challenging quarter for the UK grocery sector.

Group continuing operations revenues dipped 2.9% during Q3 2019 and 4.0% for the year-to-date. The Company’s revenues also dropped in its convenience food categories, down 9.8% during Q3 2019, and down 16.9% for the YTD. However, its Food to Go categories were up 0.6% during the quarter and 4.6% so far for the year.

Greencore Group statement

Looking forwards, the Company’s statement read,

“The Group is performing well against its strategic and financial objectives, despite the soft underlying revenue growth in Q3. The final quarter represents a seasonally important period for Greencore and the Group continues to anticipate growth in Adjusted Operating Profit for the full year supported by underlying revenue growth and a good operational performance.”

“In addition, the Group anticipates that FY19 Net Debt:EBITDA, as measured under financing agreements, will be at the lower end of its medium term target range of between 1.5x to 2.0x.”

Regarding its well-performing Food to Go branch, the Company stated,

“In the Group’s food to go categories, reported revenue was £250.6m in Q3, an increase of 0.6% on both a pro forma and reported basis, all driven by underlying product revenue growth. This growth reflected weak market conditions with unseasonal weather, a varied trading performance across the customer portfolio, set against a strong comparative period. Year to date, reported revenue in food to go categories was £697.8m, an increase of 4.6% on both a pro forma and reported basis.”

Investor notes

After a slight recovery, the Company’s shares are currently down 5.02% or 11.30p to 213.80p a share 30/07/19 13:56 BST. Peel Hunt analysts have reiterated their ‘Hold’ stance, while Shore Capital reiterated their ‘Buy’ stance on Greencore Group stock. The Group’s p/e ratio is 14.91 and their dividend ratio stands at 2.61%.

Elsewhere, there have been updates from other food and drink retailers; NWF Group plc (LON: NWF), Cranswick plc (LON: CWK), Nestle SA (SWX: NESN) and Fuller, Smith and Turner plc (LON: FSTA).